Question

The following facts pertain to the tax provision of Frazier Corporation:
Frazier Corporation began operations on 1/1/12. For its second year of operations, 2013, it has the following activity:
Pretax financial income	$       781,000
Municipal interest	13,000
Accrual of warranty costs in excess of amounts paid - expected to reverse next year	21,000
Premiums paid on officers' life insurance policies	13,000
Meals and Entertainment costs incurred for 2013	15,000
Fines incurred for violation of Clean-Air Act	6,000
Percentage depletion in excess of cost depletion	58,000
In addition to the foregoing, Frazier Corporation received $73,000 of rents in 2013 of which $32,000 remained unearned as of 12/31/13. It is anticipated that the remaining amount will be earned in 2014.
On January 1, 2012, Frazier Corporation acquired and placed in service a truck at a cost of $92,000. The company depreciates the truck over 6 years for tax purposes and over 12 years for book purposes. The company uses the straight-line method for both book and tax purposes.
As of December 31, 2012, the temporary difference arising from depreciating the truck was the only difference that existed.
The enacted tax rate for 2012 was 40%, and 33% for 2013. For 2014 and all future years, it is 38%.
Note: as of 12/31/12, the 40% enacted tax rate was the only tax rate that was enacted. The rates used for 2013 and beyond were not enacted until after the financial statements for 2012 had been issued. Based on the foregoing facts, answer the following questions. Answers should be entered as WHOLE, ABSOLUTE NUMBERS ONLY.

Based on the foregoing, what is the financial accounting net income of Frazier Corporation for the year ended 12/31/13?

Based on the foregoing, what should be recorded as the current portion of the total provision (aka current taxes payable) for 2013?

Based on the foregoing, what is the amount of the net change in the net deferred tax asset/liability of Frazier Corporation for 2013?

Based on the foregoing, what is the amount of the net noncurrent deferred tax asset/liability that should be reflected on Frazier Corporation's balance sheet as of 12/31/12?

Answer 1

Ans 1
Financial accounting Net Income
Pre tax income	7,81,000.00
Add: Rent Income	73,000.00
Less: Tax Payment	3,46,127.00
(refer working Note 1)
Financial accounting Net Income	5,07,873.00
Ans 2
Current portion of tax payable	3,44,134.00
(refer working Note 1)
Ans 3
Net Change in Deferred Tax Assets/ Liability
(refer working Note 2)
Opening Deferret Tax Liability	3,066.00
Closing Deferret Tax Liability	5,059.00
Net Change (Increase in DTL)	1,993.00
Ans 4
Net Non Current Deferred	5,059.00
tax Liability as on 31.12.2013
(refer working Note 2)

Working Note: 1
Calculation of tax payable
Particulars	Tax Treatment	Amount
Pretax Financial Income		7,81,000.00
Less: Muncipal Interest	Exempt From Tax	13,000.00
Add: Accrual of warrenty	Not deductible for tax	21,000.00
Premium paid	Deductible for tax	-
Meal Expenses	Deductible for tax	-
Add: Fines	Not deductible for tax	6,000.00
Depletion	Deductible for tax	-
Add: Depreciation as books		7,667.00
Less: Depreciation as tax		15,333.00
	Total Financial Income		7,87,334.00
	Rent Income		73,000.00
	Total Income		8,60,334.00
	Current Tax	33%	3,44,134.00
	Deferred Tax Expense	33%	1,993.00
	Total Tax		3,46,127.00

Working Note: 2
	Opening	Dep	as on 31.12.2012	Dep	as on 31.12.2013
Books	92,000.00	7,667.00	84,333.00	7,667.00	76,666.00
Income tax	92,000.00	15,333.00	76,667.00	15,333.00	61,334.00
		Difference	7,666.00		15,332.00
	Deferred Tax Liability		3,066.40		5,059.56