Two Independent Situations Are Described Below

question 72

Essay

Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: The enacted tax rate is 40% for both situations.
Required:
For each situation determine the:
(a.) Income tax payable currently.
(b.) Deferred tax asset - balance at year-end.
(c.) Deferred tax asset change dr or (cr) for the year.
(d.) Deferred tax liability - balance at year-end.
(e.) Deferred tax liability change dr or (cr) for the year.
(f.) Income tax expense for the year.

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Definitions:

Operating Capacity

The maximum output that a company can produce and sell with its existing equipment and resources, without incurring unsustainable costs.

Marble

A metamorphic rock composed primarily of calcite or dolomite, known for its use in sculpture and as a building material.

Long-range Financial Planning

The process of determining a company's financial goals, strategies, and resources over a future period, typically spanning several years.

Analysis

A detailed examination of the elements or structure of something, typically as a basis for discussion or interpretation.