CHAPTER 32 DEPLETION

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT COMPUTATION

PROBLEM 32-1 PROBLEM 32-1
2019 COST
(1) Wasting Assets 960,000 Divide by estimated units
Cash 960,000 Depletion Rate
To record acquisition and development Multiply by Extracted units
Depletion - 2019
Dec-31 Depletion 400,000
Accumulated Depletion 400,000 STATEMENT OF FINANCIAL POSITIO
To record depletion

2020
(1) Wasting Assets 490,000 Add'l Cost
Cash 490,000 Depletable Amount
To record acquisition and development Divide by estimated units
Depletion Rate
Dec-31 Depletion 450,000
Accumulated Depletion 450,000 Multiply by Extracted units
To record depletion
STATEMENT OF FINANCIAL POSITIO

2021
(1) Wasting Assets 500,000 Add'l Cost
Cash 500,000 Depletable Amount
To record acquisition and development Divide by estimated units
Depletion Rate
Dec-31 Depletion 308,000
Accumulated Depletion 308,000 Multiply by Extracted units
To record depletion
STATEMENT OF FINANCIAL POSITIO

PROBLEM 32-2 PROBLEM 32-2

2019 TOTAL ESTIMATED UNITS
(1) Wasting Assets 3,960,000 DIVIDE BY Annual Extraction
Cash 3,960,000
 To record acquisition ESTIMATED LIFE OF RESOURCE DEP
UL - BLDG
(2) Building 960,000 UL - EQPT
Equipment 1,240,000
Cash 2,200,000 Cost
To record acquisition Less: Residual Value
Depletable Amount
Divide by estimated units
Depletion Rate
Dec-31 Depletion 384,000
Accumulated Depletion 384,000 Multiply by Extracted units
To record depletion

31 Depreciation 406,000
Accum Dep'n - Bldg 96,000
Accum Dep'n - Eqpt 310,000
To record depreciation

2020
Dec-31 Depletion 800,000
Accumulated Depletion 800,000 Multiply by Extracted units
To record depletion

31 Depreciation 510,000
Accum Dep'n - Bldg 200,000
Accum Dep'n - Eqpt 310,000
To record depreciation STATEMENT OF FINANCIAL POSITIO

PROBLEM 32-8 PROBLEM 32-8

2019 Acquisition Cost
(1) Wasting Assets 10,000,000 Exploration Cost
Cash 10,000,000 Development Cost
To record acquisition Restoration Cost
WASTING ASSET
(2) Wasting Assets 1,600,000 Less: Residual Value
Cash 1,600,000 Depletable Amount
 To record development costs Divide by estimated units
Depletion Rate - 2019
Dec-31 Depletion 1,200,000 Extracted units - 2019
Accumulated Depletion 1,200,000 Depletion - 2019
To record depletion
DEPLETABLE AMOUNT - 2020
2020 Units to be extracted -2020
Dec-31 Depletion 1,344,000
Accumulated Depletion 1,344,000
To record depletion Depletion Rate - 2020
Extracted units - 2019
Depletion - 2019

Wasting Asset @ cost

Accumulated Depletion
Carrying Amount
PLETION

COMPUTATIONS
PROBLEM 32-1
COST 960,000
Divide by estimated units 2,400,000
Depletion Rate 0.40
Multiply by Extracted units 1,000,000
Depletion - 2019 400,000

STATEMENT OF FINANCIAL POSITION

Wasting Asset @ cost 960,000
Accumulated Depletion 400,000
Carrying Amount 560,000

Add'l Cost 490,000

Depletable Amount 1,050,000
Divide by estimated units 1,400,000
Depletion Rate 0.75

Multiply by Extracted units 600,000 450,000

STATEMENT OF FINANCIAL POSITION - 2020

Wasting Asset @ cost 1,450,000
Accumulated Depletion 850,000
Carrying Amount 600,000

Add'l Cost 500,000

Depletable Amount 1,100,000
Divide by estimated units 2,500,000
Depletion Rate 0.44

Multiply by Extracted units 700,000 308,000

STATEMENT OF FINANCIAL POSITION - 2021

Wasting Asset @ cost 1,950,000
Accumulated Depletion 1,158,000
Carrying Amount 792,000

PROBLEM 32-2
TOTAL ESTIMATED UNITS 120,000
DIVIDE BY Annual Extraction 24,000
2 12,000
 ESTIMATED LIFE OF RESOURCE DEP 5
UL - BLDG 8 OUTPUT
UL - EQPT 4 SL

Cost 3,960,000
Less: Residual Value 120,000
Depletable Amount 3,840,000
Divide by estimated units 120,000
Depletion Rate 32.00

Multiply by Extracted units 12,000 384,000

960K / 120K 8.00 96,000

1240K/4 310,000

Multiply by Extracted units 25,000 800,000

960K / 120K 8.00 200,000

STATEMENT OF FINANCIAL POSITION - 2020

Wasting Asset @ cost 3,960,000
Accumulated Depletion 1,184,000
Carrying Amount 2,776,000

Building 960,000
Accumulated Dereciation 296,000
Carrying Amount 664,000

Equipment 1,240,000
Accumulated Dereciation 620,000
Carrying Amount 620,000

PROBLEM 32-8
Acquisition Cost 10,000,000
Exploration Cost
Development Cost 1,600,000
Restoration Cost
WASTING ASSET 11,600,000
Less: Residual Value 2,000,000
Depletable Amount 9,600,000
Divide by estimated units 4,000,000
Depletion Rate - 2019 2.40
Extracted units - 2019 500,000
Depletion - 2019 1,200,000

DEPLETABLE AMOUNT - 2020 8,400,000

Units to be extracted -2020
Units - end of 2020 4,200,000
Units extracted -2020 800,000 5,000,000
Depletion Rate - 2020 1.68
Extracted units - 2019 800,000
Depletion - 2019 1,344,000

SFP 2019 2020

Wasting Asset @ cost 11,600,000 11,600,000
Accumulated Depletion 1,200,000 2,544,000
Carrying Amount 10,400,000 9,056,000
 CHAPTER 33 REVALUATION

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT COMPUTATIONS

PROBLEM 33-1 PROBLEM 33-1
2019 REVALUATION TABLE
(1) Machinery 2,700,000 Machinery
Accumulated Depreciation 540,000 Accumulated Depreciation
Revaluation Surplus 2,160,000 CA / SV / RS
To record revaluation
COST
Divide by Annual Depreciation

ORIGINAL USEFUL LIFE

Dec-31 Depreciation 480,000
Accum Dep'n - Bldg 480,000
To record depreciation

Dec-31 Revaluation Surplus 180,000

Retained Earnings 180,000
To record piecemeal realization

PROBLEM 33-2 PROBLEM 33-2

2019 REVALUATION TABLE
(1) Machinery 1,800,000 Machinery
Accumulated Depreciation 450,000 Accumulated Depreciation
Revaluation Surplus 1,350,000 CA / SV / RS
To record revaluation
COST
Divide by Annual Depreciation

ORIGINAL USEFUL LIFE

Dec-31 Depreciation 240,000
Accum Dep'n - Bldg 240,000
To record depreciation

Dec-31 Revaluation Surplus 90,000

Retained Earnings 90,000
To record piecemeal realization

PROBLEM 33-4 PROBLEM 33-4

2019 REVALUATION TABLE
(1) Equipment 2,700,000 Equipment
Accumulated Depreciation 500,000 Residual Value
Revaluation Surplus 2,200,000 Depreciable Amount
 To record revaluation Accumulated Depreciation
Depreciable Amount
CA / SV / RS

Dec-31 Depreciation 750,000

Accumulated Depreciation 750,000
To record depreciation

Dec-31 Revaluation Surplus 220,000

Retained Earnings 220,000 Selling Price
To record piecemeal realization Less: Carrying amount

2020
Jan-01 Cash 8,000,000 Gain / (Loss) on sale
Accumulated Depreciation 2,250,000
Equipment 9,200,000
Gain on sale of Eqpt 1,050,000
To record sale

Jan-01 Revaluation Surplus 1,980,000

Retained Earnings 1,980,000
To record realization

PROBLEM 33-9 PROBLEM 33-9

2019 Accumulated Depreciation - Jan 1, 20
Jun 30 Depreciation 15,000,000 Divide by Annual Depreciation
Accumulated Depreciation 15,000,000
To record depreciation
AGE OF ASSET
Jun 30 Land 15,000,000 ADD: 1/2 Dep'n (Jan - Jun)
Building 150,000,000 Accumulated Depreciation - Jun 30, 2
Accumulated Depreciation 30,000,000
Revaluation Surplus 135,000,000 REVALUATION TABLE
To record revaluation Building
Accumulated Depreciation
CA / SV / RS

LAND

Dec-31 Depreciation 20,000,000

Accumulated Depreciation 20,000,000
To record depreciation
Dec-31 Revaluation Surplus 5,000,000
Retained Earnings 5,000,000
To record piecemeal realization

2020 NON CURRENT ASSET

Dec-31 Depreciation 40,000,000 PROPERTY PLANT & EQUIPMENT
Accumulated Depreciation 40,000,000
To record depreciation

Dec-31 Revaluation Surplus 10,000,000

Retained Earnings 10,000,000
To record piecemeal realization SHAREHOLDERS' EQUITY
RESERVES

2021
Mar 31 Cash 70,000,000 SELLING PRICE
Land 65,000,000 Less: Carrying amount
Gain on sale of land 5,000,000 Gain / (Loss) on sale
To record sale

Mar 31 Revaluation Surplus 15,000,000 NON CURRENT ASSET

Retained Earnings 15,000,000 PROPERTY PLANT & EQUIPMENT
To record piecemeal realization

Dec-31 Depreciation 40,000,000

Accumulated Depreciation 40,000,000
To record depreciation SHAREHOLDERS' EQUITY
RESERVES
Dec-31 Revaluation Surplus 10,000,000
Retained Earnings 10,000,000
To record piecemeal realization
LUATION

COMPUTATIONS
PROBLEM 33-1
REVALUATION TABLE COST REPLACEMENT APPRECIATION
Machinery 4,500,000 7,200,000 2,700,000
Accumulated Depreciation 900,000 1,440,000 540,000
CA / SV / RS 3,600,000 5,760,000 2,160,000

COST 4,500,000
Divide by Annual Depreciation
Accum. Dep'n 900,000
Divide by Age of Asset 3 300,000
ORIGINAL USEFUL LIFE 20.00% 15 YEARS

5,760,000 12 YEARS

2,160,000 12 YEARS

PROBLEM 33-2
REVALUATION TABLE COST REPLACEMENT APPRECIATION
Machinery 3,000,000 4,800,000 1,800,000
Accumulated Depreciation 750,000 1,200,000 450,000
CA / SV / RS 2,250,000 3,600,000 1,350,000

COST 3,000,000
Divide by Annual Depreciation
Accum. Dep'n 750,000
Divide by Age of Asset 5 150,000
ORIGINAL USEFUL LIFE 25.00% 20 YEARS

3,600,000 15 YEARS

1,350,000 15 YEARS

PROBLEM 33-4 500000

REVALUATION TABLE COST REPLACEMENT APPRECIATION
Equipment 6,500,000 9,200,000 2,700,000
Residual Value 200,000 200,000 0
Depreciable Amount 6,300,000 9,000,000 2,700,000
 Accumulated Depreciation 1,000,000 1,500,000 500,000
Depreciable Amount 5,300,000 7,500,000 2,200,000
CA / SV / RS 5,500,000 7,700,000
Useful Life 12
Divide by Age of Asset 2
16.67%
7,500,000 10 YEARS

2,200,000 10 YEARS

Selling Price 8,000,000

Less: Carrying amount
Cost 9,200,000
Less: Accum Depn 2,250,000 6,950,000
Gain / (Loss) on sale 1,050,000

PROBLEM 33-9
Accumulated Depreciation - Jan 1, 2019 75,000,000
Divide by Annual Depreciation
Cost 450,000,000
Divide by Useful Life 15 30,000,000
AGE OF ASSET 2.5 years
ADD: 1/2 Dep'n (Jan - Jun) 15,000,000
Accumulated Depreciation - Jun 30, 2019 90,000,000

REVALUATION TABLE COST REPLACEMENT APPRECIATION

Building 450,000,000 600,000,000 150,000,000
Accumulated Depreciation 90,000,000 120,000,000 30,000,000
CA / SV / RS 360,000,000 480,000,000 120,000,000

LAND 50,000,000 65,000,000 15,000,000

REVALUATION SURPLUS 135,000,000

480,000,000 12 YEARS
6 months
 120,000,000 12 YEARS
6 months

Statement of Financial Position - 2020

NON CURRENT ASSET
PROPERTY PLANT & EQUIPMENT
Land 65,000,000
Building 600,000,000
Accumulated Depreciat 180,000,000 420,000,000
TOTAL 485,000,000

SHAREHOLDERS' EQUITY
RESERVES
Revaluation Surplus 120,000,000

SELLING PRICE 70,000,000

Less: Carrying amount 65,000,000
Gain / (Loss) on sale 5,000,000

Statement of Financial Position - 2021

NON CURRENT ASSET
PROPERTY PLANT & EQUIPMENT
Building 600,000,000
Accumulated Depreciation 220,000,000
Carrying Amount 380,000,000

SHAREHOLDERS' EQUITY
RESERVES
Revaluation Surplus 95,000,000
 CHAPTER 34 & 35 IMPAIRMENT

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT COMPUTATIONS

PROBLEM 34-1 PROBLEM 34-1
2019 Original Cost
Jan 1 Impairment Loss 900,000 Accumulated Depreciation
Accumulated Depreciation 900,000 Carrying Amount
To record impairment Recoverable Amount
IMPAIRMENT LOSS
Dec-31 Depreciation 500,000
Accumulated Depreciation 500,000
To record depreciation
Original Cost
Accumulated Depreciation
Carrying Amount - Dec 31, 2019

PROBLEM 34-2 PROBLEM 34-2

2019 Original Cost
Jan 1 Impairment Loss 1,125,000
Accumulated Depreciation 1,125,000
To record impairment
Original Cost
Dec-31 Depreciation 375,000 Accumulated Depreciation
Accumulated Depreciation 375,000 Carrying Amount
To record depreciation Recoverable Amount
IMPAIRMENT LOSS

Original Cost
Accumulated Depreciation
Carrying Amount - Dec 31, 2019

PROBLEM 34-10 PROBLEM 34-10

2019 Original Cost
Jan 1 Equipment 11,000,000
Cash 11,000,000
To record acquisition
Accumulated Depreciation
Dec-31 Depreciation 1,100,000 Carrying Amount - Dec, 2019
Accumulated Depreciation 1,100,000 Recoverable Amount - 2019
To record depreciation IMPAIRMENT LOSS
Dec-31 Impairment Loss 1,350,000 2 Carrying Amount - No Impairment
Accumulated Depreciation 1,350,000 Recoverable Amount - 2020
To record impairment Carrying Amount - W/Impairment
2020 GAIN on reversal of impairment loss
Dec-31 Depreciation 950,000
Accumulated Depreciation 950,000 Carrying amount - 2019
To record depreciation

Dec-31 Accumulated Depreciation 800,000

Gain on Reversal of Impairment 800,000
To record reversal of impairment

2021
Dec-31 Depreciation 1,050,000 Carrying amount - 2020
Accumulated Depreciation 1,050,000
To record depreciation

PROBLEM 35-3 PROBLEM 35-3

2019 Carrying Amount - CGU
(1) Impairment Loss 15,000,000 Value in Use
Accounts Receivable 2,000,000 IMPAIRMENT LOSS
Inventory 3,000,000 Applicable to Goodwill
Accumulated Depreciation 5,000,000 Allocated to
Goodwill 5,000,000
To record impairment

PROBLEM 35-4 PROBLEM 35-4

2019 Carrying Amount - CGU
(1) Impairment Loss 2,800,000 Value in Use
Accounts Receivable 600,000 IMPAIRMENT LOSS
Accumulated Depreciation 1,000,000 Applicable to Goodwill
Patent 200,000 Allocated to
Goodwill 1,000,000
To record impairment

PROBLEM 35-5 PROBLEM 35-5

2019 Carrying Amount - CGU
(1) Impairment Loss 7,000,000 Value in Use
Inventory 1,120,000 IMPAIRMENT LOSS
Accumulated Depreciation 2,880,000 Applicable to Goodwill
Goodwill 3,000,000 Allocated to
To record impairment
MPAIRMENT

COMPUTATIONS
PROBLEM 34-1
Original Cost 4,500,000
Accumulated Depreciation 2,100,000
Carrying Amount 2,400,000
Recoverable Amount 1,500,000
IMPAIRMENT LOSS 900,000
Remaining Useful Life 3 years
Annual Depreciation 500,000

Original Cost 4,500,000

Accumulated Depreciation 3,500,000
Carrying Amount - Dec 31, 2019 1,000,000

PROBLEM 34-2
Original Cost 2,500,000
Residual Value 500,000
Useful Life 8 years
Annual Depreciation 250,000
Original Cost 2,500,000
Accumulated Depreciation 2 500,000
Carrying Amount 2,000,000
Recoverable Amount 875,000
IMPAIRMENT LOSS 1,125,000
Residual Value 125,000
Remaining Useful Life 2 years
Annual Depreciation 375,000

Original Cost 2,500,000

Accumulated Depreciation 2,000,000
Carrying Amount - Dec 31, 2019 500,000

PROBLEM 34-10
Original Cost 11,000,000
Residual Value
Useful Life 10 years
Annual Depreciation 1,100,000
Accumulated Depreciation 1,100,000
Carrying Amount - Dec, 2019 9,900,000
Recoverable Amount - 2019 8,550,000
IMPAIRMENT LOSS 1,350,000
 Carrying Amount - No Impairment 8,800,000
Recoverable Amount - 2020 8,400,000 LOWER
Carrying Amount - W/Impairment 7,600,000
GAIN on reversal of impairment loss 800,000

Carrying amount - 2019 8,550,000

Remaining Useful Life 9 years
Annual Depreciation 950,000

2019 2020 2021

Original Cost 11,000,000 11,000,000 11,000,000
Accumulated Depreciation 2,450,000 2,600,000 3,650,000
Carrying Amount 8,550,000 8,400,000 7,350,000
Carrying amount - 2020 8,400,000
Remaining Useful Life 8 years
Annual Depreciation 1,050,000

PROBLEM 35-3
Carrying Amount - CGU 115,000,000
Value in Use 2 100,000,000
IMPAIRMENT LOSS 15,000,000
Applicable to Goodwill 5,000,000
Allocated to 10,000,000
Accounts Receivable 20 2,000,000
Inventory 30 3,000,000
PPE 50 5,000,000
100

PROBLEM 35-4
Carrying Amount - CGU 10,000,000
Value in Use 2 7,200,000
IMPAIRMENT LOSS 2,800,000
Applicable to Goodwill 1,000,000
Allocated to 1,800,000
Accounts Receivable 3 600,000
Machinery 5 1,000,000
Patent 1 200,000
9

PROBLEM 35-5
Carrying Amount - CGU 37,000,000
Value in Use 2 30,000,000
IMPAIRMENT LOSS 7,000,000
Applicable to Goodwill 3,000,000
Allocated to 4,000,000
Inventory 7 1,120,000
Machinery 18 2,880,000
25
 CHAPTER 36 INTANGIBLE ASSETS - GOODWILL

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT COMPUTATIONS

PROBLEM 36-1 PROBLEM 36-1
2019 Purchase Price
(1) Cash 50,000 Fair Value of assets
Accounts Receivable 800,000 Fair Value of Liabilities
Inventory 1,350,000 Net Assets @ Fair Value
Property Plant & Equipment 4,300,000 GOODWILL
Goodwill 2,900,000
Accounts Payable 900,000
Notes Payable - bank (LT) 1,000,000
Cash 7,500,000
To record impairment

PROBLEM 36-2 PROBLEM 36-2

2019 Purchase Price
(1) Cash 50,000 Fair Value of assets
Accounts Receivable 500,000 Fair Value of Liabilities
Inventory 1,500,000 Net Assets @ Fair Value
Property Plant & Equipment 3,000,000 GOODWILL
Patent 250,000
Goodwill 2,700,000
Accounts Payable 2,000,000
Cash 6,000,000
To record impairment

PROBLEM 36-5 PROBLEM 36-5

Assets @ FV before Goodwill 2,600,000
Liabilities 900,000
Shareholders' Equity 1,700,000

(1) AVERAGE EARNINGS 250,000 (3)

Divide by Capitalization Rate 10%
NET ASSETS (Purchase Price & GW) 2,500,000
Less: Net Assets, excl'g GW 1,700,000
GOODWILL 800,000

(2) AVERAGE EARNINGS 250,000 (4)

Less: Normal Earnings 1,700,000
 Rate of Return 8% 136,000
EXCESS EARNINGS 114,000
Divide by Capitalization Rate 15%
GOODWILL 760,000
ASSETS - GOODWILL CHAPTER 37 INTANGIBLE ASS

COMPUTATIONS DATE ACCOUNT TITLE & EXPLANATION

PROBLEM 36-1 PROBLEM 37-1
Purchase Price 7,500,000 2019
Fair Value of assets 6,500,000 Jan 1 Patent
Fair Value of Liabilities 1,900,000 Cash
Net Assets @ Fair Value 4,600,000 To record cost of licensing and registration
GOODWILL 2,900,000
Dec-31 Amortization of Patent
Patent
To record amortization

2020
Dec-31 Amortization of Patent
Patent
To record amortization
PROBLEM 36-2
Purchase Price 6,000,000 2021
Fair Value of assets 5,300,000 Jan 1 Legal Expense
Fair Value of Liabilities 2,000,000 Cash
Net Assets @ Fair Value 3,300,000 To record cost of successful infringement suit
GOODWILL 2,700,000
Dec-31 Amortization of Patent
Patent
To record amortization

2022
Jan 1 Patent
Cash
PROBLEM 36-5 To record acquisition of competing patent
2015 200,000
2016 230,000 Dec-31 Amortization of Patent
2017 300,000 Patent
2018 250,000 To record amortization
2019 270,000
TOTAL EARNINGS 1,250,000
AVERAGE EARNINGS 250,000 PROBLEM 37-4
2019
AVERAGE EARNINGS 250,000 Jan 1 Patent
Normal Earnings 10% 170,000 Cash
EXCESS EARNINGS 80,000 To record cost of licensing and registration
Mulitply by # of yrs 5
GOODWILL 400,000 Dec-31 Amortization of Patent
Patent
AVERAGE EARNINGS 250,000 To record amortization
Normal Earnings 10% 170,000
EXCESS EARNINGS 80,000 2020
PV of OA of @ 12% for 10 yrs 6 Dec-31 Amortization of Patent
GOODWILL 452,000 Patent
To record amortization

2021
Dec-31 Amortization of Patent
Patent
To record amortization

2022
Dec-31 Amortization of Patent
Patent
To record amortization

PROBLEM 37-9
2019
Jan 1 Copyright
Cash
To record acquisition

Dec-31 Amortization of Copyright

Copyright
To record amortization

2020
Dec-31 Amortization of Copyright
Copyright
To record amortization

2021
Dec-31 Amortization of Copyright
Copyright
To record amortization

2022
Dec-31 Amortization of Copyright
Copyright
To record amortization

PROBLEM 37-10
2018
(1) Retained Earnings
Cash
To record acquisition of copyright

Dec-31 Amortization of Copyright

 Retained Earnings
To record amortization

2019
(1) Copyright
Retained Earnings
To record acquisition of copyright

Dec-31 Amortization of Copyright

Copyright
To record amortization
CHAPTER 37 INTANGIBLE ASSETS - PATENT, COPYRIGHT, TM

DEBIT CREDIT COMPUTATIONS

PROBLEM 37-1
Original Cost 255,000
255,000 LEGAL LIFE 20 years
255,000 Annual Amortization 12,750
nsing and registration

12,750
12,750 Carrying Amount - 2019 242,250

12,750 Carrying Amount - 2020 229,500

12,750

90,000
90,000
cessful infringement suit

12,750 Carrying Amount - 2021 216,750

12,750

COST of Competing Patent 510,000

Cost of PATENT - 2022 726,750
510,000 Remaining Legal Life 17 years
510,000 Annual Amortization 42,750
of competing patent If a competitive patent is acquired to protect an
original patent, the cost of competitive patent
42,750 shall be amortized over the remaining life of the
42,750 old patent
Carrying Amount - 2022 684,000

PROBLEM 37-4
Original Cost 7,140,000
7,140,000 LEGAL LIFE 15 years
7,140,000 Annual Amortization 476,000
nsing and registration

476,000
476,000 Carrying Amount - 2019 6,664,000
 476,000 Carrying Amount - 2020 6,188,000
476,000

476,000 Carrying Amount - 2021 5,712,000

476,000 LEGAL LIFE 7 years
Annual Amortization 816,000

816,000 Carrying Amount - 2022 4,896,000

816,000

PROBLEM 37-9
Original Cost 285,000
285,000 PERIODS COPIES AMORTIZATION CA
285,000 2019 50,000 150,000 135,000
2020 30,000 90,000 45,000
2021 10,000 30,000 15,000
150,000 2022 5,000 15,000 0
150,000 95,000 285,000

90,000
90,000

30,000
30,000

15,000
15,000

PROBLEM 37-10
Original Cost 300,000
300,000 USEFUL LIFE 5 years
300,000 Annual Amortization 60,000
of copyright

60,000
 60,000

Carrying Amount - 2018 240,000

240,000
240,000
of copyright

60,000 Carrying Amount - 2019 180,000

60,000
 PROBLEM 16-1
2020 ABC COMPANY
ACCOUNTING 2,000,000 2020 Income Tax expense 200,000 Taxable Income
TAXABLE 1,500,000 Cash 200,000 TAX RATE
TAX RATE 30% To record payment Current Tax Expense
PAYMENT 200,000 Tax Payment
31-Dec Income Tax expense 250,000 Income Tax Payable
Income Tax Payable 250,000
To record current tax expense Pretax Financial Inco
Taxable Income
31-Dec Income Tax expense 150,000 Taxable Temp. Diffe
Deferred Tax Liability 150,000 TAX RATE
To record deferred tax expense Deferred Tax Liabilit
0
ACCOUNTING INCOME 2,000,000
Income Tax expense
Current Tax Expense 450,000
Deferred Tax Expense 150,000 600,000
NET INCOME 1,400,000

PROBLEM 16-2
2020 ZEUS COMPANY
ACCOUNTING 3,000,000 2020 Income Tax expense 500,000 Taxable Income
TAXABLE 4,000,000 Cash 500,000 TAX RATE
TAX RATE 30% To record payment Current Tax Expense
PAYMENT 500,000 Tax Payment
31-Dec Income Tax expense 700,000 Income Tax Payable
Income Tax Payable 700,000
To record current tax expense Pretax Financial Inco
0 Taxable Income
31-Dec Deferred Tax Asset 300,000 Deductible Temp. D
Income Tax Benefit 300,000 TAX RATE
To record income tax benefit Deferred Tax Asset

ACCOUNTING INCOME 3,000,000

Income Tax expense
Current Tax Expense 1,200,000
Income Tax Benefit (300,000) 900,000
NET INCOME 2,100,000

PROBLEM 16-3
2020 2020 ARGENTINA COMPANY
ACCOUNTING 6,000,000 31-Dec Income Tax expense 2,100,000 Taxable Income
TAXABLE 7,000,000 Income Tax Payable 2,100,000 TAX RATE
TAX RATE 30% To record current tax expense Current Tax Expense
PAYMENT 0 Tax Payment
31-Dec Deferred Tax Asset 300,000 Income Tax Payable
Income Tax Benefit 300,000
To record income tax benefit Pretax Financial Inco
 Taxable Income
ACCOUNTING INCOME 6,000,000 Deductible Temp. D
Income Tax expense TAX RATE
Current Tax Expense 2,100,000 Deferred Tax Asset
Income Tax Benefit (300,000) 1,800,000
NET INCOME 4,200,000

2021 2021 ARGENTINA COMPANY

ACCOUNTING 9,000,000 31-Dec Income Tax expense 2,400,000 Taxable Income
TAXABLE 8,000,000 Income Tax Payable 2,400,000 TAX RATE
TAX RATE 30% To record current tax expense Current Tax Expense
PAYMENT 0 Tax Payment
31-Dec Income Tax expense 300,000 Income Tax Payable
Deferred Tax Asset 300,000
To decrease deferred tax asset Pretax Financial Inco
Taxable Income
ACCOUNTING INCOME 9,000,000 Deductible Temp. D
Income Tax expense TAX RATE
Current Tax Expense 2,400,000 Decrease in DTA
Decrease in Deferred Tax Ass 300,000 2,700,000
NET INCOME 6,300,000

PROBLEM 16-4
2020 2020 COLOMBO COMPANY
ACCOUNTING 5,500,000 31-Dec Income Tax expense 1,500,000 Taxable Income
TAXABLE 5,000,000 Income Tax Payable 1,500,000 TAX RATE
TAX RATE 30% To record current tax expense Current Tax Expense
PAYMENT 0 Tax Payment
31-Dec Income Tax expense 150,000 Income Tax Payable
Deferred Tax Liability 150,000
To record deferred tax expense Pretax Financial Inco
Taxable Income
ACCOUNTING INCOME 5,500,000 Taxable Temp. Diffe
Income Tax expense TAX RATE
Current Tax Expense 1,500,000 Deferred Tax Liabilit
Deferred Tax Expense 150,000 1,650,000
NET INCOME 3,850,000

2021 2021 COLOMBO COMPANY

ACCOUNTING 7,000,000 31-Dec Income Tax expense 2,250,000 Taxable Income
TAXABLE 7,500,000 Income Tax Payable 2,250,000 TAX RATE
TAX RATE 30% To record current tax expense Current Tax Expense
PAYMENT 0 Tax Payment
31-Dec Deferred Tax Liability 150,000 Income Tax Payable
Income Tax expense 150,000
To decrease deferred tax liability Pretax Financial Inco
Taxable Income
ACCOUNTING INCOME 7,000,000 Taxable Temp. Diffe
Income Tax expense TAX RATE
 Current Tax Expense 2,250,000 Decrease in DTL
Decrease in Deferred Tax Liabi -150,000 2,100,000
NET INCOME 4,900,000
 PROBLEM 16-5
2020 30% VALLEY COMPANY
Taxable Income ### 31-Dec Income Tax expense
TAX RATE 30% Income Tax Payable
Current Tax Expense 450,000 To record current tax expense
Tax Payment 200,000
Income Tax Payable 250,000 31-Dec Income Tax expense
Deferred Tax Liability
Pretax Financial Income 2,000,000 To record deferred tax expense
Taxable Income 1,500,000
Taxable Temp. Difference 500,000
TAX RATE 30%
Deferred Tax Liability 150,000

2021 30% VALLEY COMPANY

31-Dec Income Tax expense
Income Tax Payable
To record current tax expense

31-Dec Income Tax expense

Taxable Income ### Deferred Tax Liability
TAX RATE 30% To record deferred tax expense
Current Tax Expense 1,200,000
Tax Payment 500,000 2022 30% VALLEY COMPANY
Income Tax Payable 700,000 31-Dec Income Tax expense
Income Tax Payable
Pretax Financial Income 3,000,000 To record current tax expense
Taxable Income 4,000,000
Deductible Temp. Difference 1,000,000 31-Dec Deferred Tax Liability
TAX RATE 30% Income Tax expense
Deferred Tax Asset 300,000 To decrease deferred tax liability

PROBLEM 16-6

Taxable Income ###

TAX RATE 30% 2020 30% AYE COMPANY
Current Tax Expense 2,100,000 31-Dec Income Tax expense
Tax Payment 0 Income Tax Payable
Income Tax Payable 2,100,000 To record current tax expense

Pretax Financial Income 6,000,000 31-Dec Income Tax expense

Taxable Income 7,000,000 Deferred Tax Liability
Deductible Temp. Difference 1,000,000 To record deferred tax expense
TAX RATE 30%
Deferred Tax Asset 300,000 2021 30% AYE COMPANY
31-Dec Income Tax expense
Income Tax Payable
To record current tax expense

Taxable Income ### 31-Dec Income Tax expense

TAX RATE 30% Deferred Tax Liability
Current Tax Expense 2,400,000 To record deferred tax expense
Tax Payment 0
Income Tax Payable 2,400,000 2022 30% AYE COMPANY
31-Dec Income Tax expense
Pretax Financial Income 9,000,000 Income Tax Payable
Taxable Income 8,000,000 To record current tax expense
Deductible Temp. Difference 1,000,000
TAX RATE 30% 31-Dec Deferred Tax Liability
Decrease in DTA 300,000 Income Tax expense
To decrease deferred tax liability

2023 30% AYE COMPANY

31-Dec Income Tax expense
Income Tax Payable
Taxable Income ### To record current tax expense
TAX RATE 30%
Current Tax Expense 1,500,000 31-Dec Deferred Tax Liability
Tax Payment 0 Income Tax expense
Income Tax Payable 1,500,000 To decrease deferred tax liability

Pretax Financial Income 5,500,000

Taxable Income 5,000,000
Taxable Temp. Difference 500,000
TAX RATE 30%
Deferred Tax Liability 150,000

Taxable Income ###

TAX RATE 30%
Current Tax Expense 2,250,000
Tax Payment 0
Income Tax Payable 2,250,000

Pretax Financial Income 7,000,000

Taxable Income 7,500,000
Taxable Temp. Difference -500,000
TAX RATE 30%
Decrease in DTL -150,000
LEY COMPANY Income before construction 2020 2021 2022
720,000 income 2,400,000 3,600,000 3,200,000
720,000 Percentage of Completion 600,000 1,500,000 900,000
rent tax expense ACCOUNTING INCoME 3,000,000 5,100,000 4,100,000
Cost Recovery Method 0 0 3,000,000
180,000 TAXABLE INCOME 2,400,000 3,600,000 6,200,000
180,000 DIFFERENCES 600,000 1,500,000 (2,100,000)
erred tax expense

ACCOUNTING INCOME 3,000,000

Income Tax expense
Current Tax Expense 720,000
Deferred Tax Expense 180,000 900,000
NET INCOME 2,100,000

LEY COMPANY
1,080,000 ACCOUNTING INCOME 5,100,000
1,080,000 Income Tax expense
rent tax expense Current Tax Expense 1,080,000
Income Tax Benefit 450,000 1,530,000
450,000 0 NET INCOME 3,570,000
450,000
erred tax expense

LEY COMPANY
1,860,000 ACCOUNTING INCOME 4,100,000
1,860,000 Income Tax expense
rent tax expense Current Tax Expense 1,860,000
0 Decrease in Deferred Tax Liability (630,000) 1,230,000
630,000 NET INCOME 2,870,000
630,000
deferred tax liability

2020 2021 2022

Income before depreciation
4,000,000 4,000,000 4,000,000
Straight Line Method 250,000 250,000 250,000
ACCOUNTING INCoME 3,750,000 3,750,000 3,750,000
SYD 400,000 300,000 200,000
TAXABLE INCOME 3,600,000 3,700,000 3,800,000
DIFFERENCES 150,000 50,000 (50,000)

YE COMPANY ACCOUNTING INCOME 3,750,000

1,080,000 Income Tax expense
1,080,000 Current Tax Expense 1,080,000
rent tax expense Deferred Tax Expense 45,000 1,125,000
NET INCOME 2,625,000
45,000
 45,000 NONCURRENT LIABILITY
erred tax expense DEFERRED TAX LIABILITY 45,000

YE COMPANY ACCOUNTING INCOME 3,750,000

1,110,000 Income Tax expense
1,110,000 Current Tax Expense 1,110,000
rent tax expense Income Tax Benefit 15,000 1,125,000
NET INCOME 2,625,000
15,000
15,000 NONCURRENT LIABILITY
erred tax expense DEFERRED TAX LIABILITY 60,000

YE COMPANY ACCOUNTING INCOME 3,750,000

1,140,000 Income Tax expense
1,140,000 Current Tax Expense 1,140,000
rent tax expense 45,000 Decrease in Deferred Tax Liability (15,000) 1,125,000
NET INCOME 2,625,000
15,000
15,000 NONCURRENT LIABILITY
deferred tax liability DEFERRED TAX LIABILITY 45,000

YE COMPANY ACCOUNTING INCOME 3,750,000

1,170,000 Income Tax expense
1,170,000 Current Tax Expense 1,170,000
rent tax expense 0 Decrease in Deferred Tax Liability (45,000) 1,125,000
NET INCOME 2,625,000
45,000
45,000 NONCURRENT LIABILITY
deferred tax liability DEFERRED TAX LIABILITY 0
 PROBLEM 16-7
2020 30% COMPLEX COMPANY
31-Dec Income Tax expense 756,000
Income Tax Payable 756,000
To record current tax expense

31-Dec Deferred Tax Asset 156,000

Income Tax Benefit 156,000
To record income tax benefit

2021 30% COMPLEX COMPANY

31-Dec Income Tax expense 852,000
Income Tax Payable 852,000
To record current tax expense

31-Dec Income Tax expense 48,000

Deferred Tax Asset 48,000
To decrease deferred tax asset

2022 30% COMPLEX COMPANY

31-Dec Income Tax expense 1,164,000
Income Tax Payable 1,164,000
To record current tax expense

31-Dec Income Tax expense 36,000

Deferred Tax Asset 36,000
To decrease deferred tax asset

2023 30% COMPLEX COMPANY

31-Dec Income Tax expense 1,428,000
Income Tax Payable 1,428,000
To record current tax expense

31-Dec Income Tax expense 72,000

Deferred Tax Asset 72,000
2023 To decrease deferred tax asset
4,000,000
250,000
3,750,000
100,000 PROBLEM 16-8 PRETAX ACCOUNTING IN
3,900,000 2020 30% SHANGRILA COMPANY Deductible Temporary di
(150,000) 31-Dec Income Tax expense 2,280,000
Income Tax Payable 2,280,000
To record current tax expense Taxable Temporary Diffe

31-Dec Deferred Tax Asset 210,000 TAXABLE INCOME

0 Income Tax Benefit 210,000
To record income tax benefit Par
ACCOUNTING INCOME
 31-Dec Income Tax expense 300,000 Income Tax expense
Deferred Tax Liability 300,000
To record deferred tax expense

Deferred Tax Expense 300,000 NET INCOME

Income Tax Benefit (210,000)
0 Net Deferred Tax Expense 90,000 Partial Stat
NONCURRENT ASSET

CURRENT LIABILITY

NONCURRENT LIABILITY

0
 2020 2021 2022 2023
Income before Tax
2,000,000 3,000,000 4,000,000 5,000,000
Doubtful Accounts Exp 100,000 (100,000)
Unearned Rent income 120,000 (40,000) (40,000) (40,000)
Estimated Warranty Costs 300,000 (20,000) (80,000) (200,000)
Taxable Income 2,520,000 2,840,000 3,880,000 4,760,000
DIFFERENCES (520,000) 160,000 120,000 240,000

STATEMENT OF FINANCIAL POSITION

NONCUR ASSET 2020 2021 2022 2023
DEFERRED TAX ASSET 156,000 108,000 72,000 0
CUR LIABILITY
INCOME TAX PAYABLE 756,000 852,000 1,164,000 1,428,000

INCOME STATEMENT
2020 2021 2022 2023
Income before Tax 2,000,000 3,000,000 4,000,000 5,000,000
INCOME TAX EXPENSE 600,000 900,000 1,200,000 1,500,000
Current Tax Expense 756,000 852,000 1,164,000 1,428,000
ITB / Dec in DTA (156,000) 48,000 36,000 72,000
NET INCOME 1,400,000 2,100,000 2,800,000 3,500,000

ITE 30% 600,000 900,000 1,200,000 1,500,000

0 0 0 0

PRETAX ACCOUNTING INCOME 7,900,000

Deductible Temporary difference
Litigation Loss 400,000
Warranty Cost 300,000 700,000
Taxable Temporary Difference
Excess Tax Depreciation 1,000,000 (1,000,000)
TAXABLE INCOME 7,600,000

Partial Income Statement

ACCOUNTING INCOME 7,900,000
Income Tax expense
Current Tax Expense 2,280,000
Income Tax Benefit (210,000)
Deferred Tax Expense 300,000 2,370,000 0
NET INCOME 5,530,000

Partial Statement of FINANCIAL POSITION

NONCURRENT ASSET
DEFERRED TAX ASSET 210,000
CURRENT LIABILITY
INCOME TAX PAYAB LE 2,280,000
NONCURRENT LIABILITY
DEFERRED TAX LIABILITY 300,000
PROBLEM 16-9
2019 SIMPLE COMPANY Computer SW Cost
### 31-Dec Income Tax expense 2,400,000 Building
Income Tax Payable 2,400,000 Accrued Liability -HC
30% To record current tax expense
Computer SW Cost
31-Dec Income Tax expense 2,100,000 Building
Deferred Tax Liability 2,100,000 Taxable Temp. Difference
To record deferred tax expense TAX RATE
Deferred Tax Liability
31-Dec Deferred Tax Asset 600,000
Income Tax Benefit 600,000 Deductible Temp Difference
To record income tax benefit TAX RATE
Deferred Tax Asset

Pretax Accounting Income

ACCOUNTING INCOME 13,000,000 SW cost entirely expense
Income Tax expense Excess Tax Depreciation
Current Tax Expense 2,400,000 HC Ben not yet deductible
Deferred Tax Expense 2,100,000 Taxable Income
Income Tax Benefit (600,000) 3,900,000 0 TAX RATE
NET INCOME 9,100,000 Current Tax Expense
Tax Payment
Income Tax Payable

2020
31-Dec Income Tax expense 3,450,000 Computer SW Cost
Income Tax Payable 3,450,000 Building
To record current tax expense Accrued Liability -HC

31-Dec Deferred Tax Liability 300,000 Pretax Accounting Income

Income Tax expense 300,000 SW cost entirely expense
To record decreased in DTL Excess Tax Depreciation
HC Ben not yet deductible
31-Dec Income Tax expense 450,000 Taxable Income
Deferred Tax Asset 450,000 TAX RATE
To record decrease in DTA Current Tax Expense

ACCOUNTING INCOME 12,000,000 Partial Statement of FINANC

Income Tax expense NONCURRENT ASSET
Current Tax Expense 3,450,000 DEFERRED TAX ASSET
Decrease in DTL -300,000 CURRENT LIABILITY
Decrease in DTA 450,000 3,600,000 INCOME TAX PAYAB LE
NET INCOME 8,400,000 NONCURRENT LIABILITY
DEFERRED TAX LIABILITY
 PROBLEM 16-10
2020 EASY COMPANY
### 1-Jan Equipment 4,000,000
Accumulated Deprerciation 1,500,000
30% Revaluation Surplus 2,500,000 8 3
To record current tax expense

1-Jan Revaluation Surplus 750,000

Deferred Tax Liability 750,000 Revaluation Surplus
To record deferred tax liability Deferred Tax Liability
Net Revaluation Surplus
7,500,000 5 31-Dec Depreciation Expense 1,500,000
Accumulated Depreciation 1,500,000 Equipment @ Replacement C
To record depreciation Accumulated Depreciation
Jan 1, 2020
### 5 31-Dec Revaluation Surplus 350,000 Dep'n 2020
Retained Earnings 350,000 Carrying Amount - Dec 31,202
To record realization of revaluation surplus Equipment @ Cost
Accumulated Depreciation
31-Dec Deferred Tax Liability 150,000 Jan 1, 2020
Income Tax expense 150,000 Dep'n 2020
To record decrease in DTL RAX BASE - Dec 31,2020
DEDUCTIBLE TEMPORARY DIF
31-Dec Income Tax expense 2,700,000
Income Tax Payable 2,700,000 Deferred Tax Liability - Dec 31
To recordcurrent tax expense Deferred Tax Liability - Jan 1,
Decrease in Deferred Tax liab

Pretax Accounting Income before depreciation 10,000,000 Pretax Accounting Income be

Depreciation based on revalued amount 1,500,000 Depreciation based on cost
ACCOUNTING INCOME 8,500,000 Taxable Income
Income Tax expense TAX RATE
Current Tax Expense 2,700,000 Current Tax Expense
Decrease in DTL (150,000) 2,550,000 0 Tax Payment
NET INCOME 5,950,000 Income Tax Payable
Revaluation Surplus Realization 350,000
Total Effect on Retained Earnings 6,300,000
 Tax Base
Carrying Amount Difference PROBLEM 16-11
Computer SW Cost 4,000,000 0 4,000,000 2020
15,000,000 12,000,000 3,000,000 ACCOUNTING 8,000,000 31-Dec Income Tax expense
Accrued Liability -HC 2,000,000 0 2,000,000 TAXABLE
TAX RATE 30%
Computer SW Cost 4,000,000 PAYMENT
3,000,000 31-Dec Income Tax expense
Taxable Temp. Difference 7,000,000
30%
Deferred Tax Liability 2,100,000
31-Dec Deferred Tax Asset
Deductible Temp Difference 2,000,000
30%
Deferred Tax Asset 600,000
Deferred Tax Expens
Pretax Accounting Income 13,000,000 Income Tax Benefit
SW cost entirely expense -4,000,000 Net Deferred Tax Be
Excess Tax Depreciation -3,000,000 Current Tax Expense
HC Ben not yet deductible 2,000,000 -5,000,000 Total Income Tax Exp
Taxable Income 8,000,000
30%
Current Tax Expense 2,400,000
Tax Payment 0 ACCOUNTING INCOME
Income Tax Payable 2,400,000 Income Tax expense
Current Tax Expense
Carrying Amount Tax Base Difference Deferred Tax Expens
Computer SW Cost 2,000,000 0 2,000,000 Income Tax Benefit
10,000,000 6,000,000 4,000,000 NET INCOME
Accrued Liability -HC 500,000 0 500,000

Pretax Accounting Income 12,000,000

SW cost entirely expense 2,000,000 PROBLEM 16-12
Excess Tax Depreciation -1,000,000 2020
HC Ben not yet deductible -1,500,000 -500,000 ACCOUNTING 9,000,000 31-Dec Income Tax expense
Taxable Income 11,500,000 TAXABLE
30% TAX RATE 30%
Current Tax Expense 3,450,000 PAYMENT
31-Dec Income Tax expense
Partial Statement of FINANCIAL POSITIO 2019 2020
NONCURRENT ASSET
DEFERRED TAX ASSET 600,000 150,000
CURRENT LIABILITY 31-Dec Deferred Tax Asset
INCOME TAX PAYAB LE 2,400,000 3,450,000
NONCURRENT LIABILITY
DEFERRED TAX LIABILITY 2,100,000 1,800,000
Deferred Tax Expens
 Income Tax Benefit
REPLACEMENT Net Deferred Tax Exp
COST COST APPRECIATION Current Tax Expense
EQUIPMENT 8,000,000 12,000,000 4,000,000 Total Income Tax Exp
ACCUM. DEP'N
1000000 3,000,000
1500000 4,500,000 1,500,000
CA / SV / RS 5,000,000 7,500,000 2,500,000 ACCOUNTING INCOME
Income Tax expense
Revaluation Surplus 2,500,000 Current Tax Expense
Deferred Tax Liability 30% 750,000 Deferred Tax Expens
Net Revaluation Surplus 1,750,000 Income Tax Benefit
NET INCOME
Equipment @ Replacement Cost 12,000,000
Accumulated Depreciation
Jan 1, 2020 4,500,000
Dep'n 2020 1,500,000 6,000,000
Carrying Amount - Dec 31,2020 6,000,000
Equipment @ Cost 8,000,000
Accumulated Depreciation
Jan 1, 2020 3,000,000
Dep'n 2020 1,000,000 4,000,000
RAX BASE - Dec 31,2020 4,000,000
DEDUCTIBLE TEMPORARY DIFFERENCE 2,000,000

Deferred Tax Liability - Dec 31, 2020 30% 600,000

Deferred Tax Liability - Jan 1, 2020 750,000
Decrease in Deferred Tax liability -150,000

Pretax Accounting Income before depreciation 10,000,000

Depreciation based on cost 1,000,000
Taxable Income 9,000,000
30%
Current Tax Expense 2,700,000
Tax Payment 0
Income Tax Payable 2,700,000
 Carrying Amount Tax Base
ALOHA COMPANY Accounts Receivable 1,500,000 1,750,000
Income Tax expense 2,436,000 Motor Vehicles 1,650,000 1,250,000
Income Tax Payable 2,436,000 Provision for Warranty 120,000 0
To record current tax expense Deposits received in advance 150,000 0

Income Tax expense 120,000 Taxable Temp. Difference 400,000

Deferred Tax Liability 120,000 TAX RATE 30%
To record deferred tax expense Deferred Tax Liability 120,000

Deferred Tax Asset 156,000 Doubtful Accounts 250,000

Income Tax Benefit 156,000 Provision for Warranty 120,000
To record income tax benefit Deposits received in advance 150,000
Deductible Temp Difference 520,000
Deferred Tax Expense 120,000 TAX RATE 30%
Income Tax Benefit (156,000) Deferred Tax Asset 156,000
Net Deferred Tax Benefit (36,000)
Current Tax Expense 2,436,000 Pretax Accounting Income
Total Income Tax Expense 2,400,000 Excess Tax Depreciation -400,000
Doubtful Accounts 250,000
0 Warranty not yet deductible 120,000
Advances when received 150,000
OUNTING INCOME 8,000,000 Taxable Income
ome Tax expense TAX RATE
Current Tax Expense 2,436,000 Current Tax Expense
Deferred Tax Expense 120,000 Tax Payment
Income Tax Benefit (156,000) 2,400,000 Income Tax Payable
5,600,000

Carrying Amount Tax Base

SIMPLE COMPANY PROPERTY 10,000,000 7,000,000
Income Tax expense 2,400,000 Plant & Equipment 5,000,000 4,000,000
Income Tax Payable 2,400,000 Inventory 4,000,000 6,000,000
To record current tax expense Trade Receivables 3,000,000 4,000,000

Income Tax expense 1,200,000 Excess Tax Depreciation Property 3,000,000

Deferred Tax Liability 1,200,000 Excess Tax Depreciation P&E 1,000,000
To record deferred tax expense Taxable Temp. Difference 4,000,000
TAX RATE 30%
Deferred Tax Asset 900,000 Deferred Tax Liability 1,200,000
Income Tax Benefit 900,000
To record income tax benefit No writedown 2,000,000
No impairment 1,000,000
Deferred Tax Expense 1,200,000 Deductible Temp Difference 3,000,000
 Income Tax Benefit (900,000) TAX RATE 30%
Net Deferred Tax Expense 300,000 Deferred Tax Asset 900,000
Current Tax Expense 2,400,000
Total Income Tax Expense 2,700,000 Pretax Accounting Income
Excess Tax Depreciation Property -3,000,000
0 Excess Tax Depreciation P&E -1,000,000
Writedown, when sold 2,000,000
OUNTING INCOME 9,000,000 Impairment, when collected 1,000,000
ome Tax expense Taxable Income
Current Tax Expense 2,400,000 TAX RATE
Deferred Tax Expense 1,200,000 Current Tax Expense
Income Tax Benefit (900,000) 2,700,000 Tax Payment
6,300,000 Income Tax Payable
Difference
250,000 DTD
400,000 TTD
120,000 DTD
150,000 DTD

8,000,000

120,000
8,120,000
30%
2,436,000
0
2,436,000

Difference
3,000,000 TTD
1,000,000 TTD
-2,000,000 DTD
-1,000,000 DTD
9,000,000

-1,000,000
8,000,000
30%
2,400,000
0
2,400,000