Question

Please full the table in (b) The following information pertaining Juniper Corporation is available for the year ended 2015,its first year of operations: :

Pretax financial income, $200,000.

Excess of tax deprecation over book depreciation equals $36,000 in 2015 (future taxable). This temporary difference (i.e., $36,000 depreciation expense) will be reversed as follows: $23,000 in 2016 and $13,000 in 2017.

The tax rates of 2015, 2016 and 2017 are 30%, 25%, and 25%, respectively.  

Instructions:

Compute Juniper’s 2015 taxable income.

Pretax accounting income                               $ 200,000

Less: additional accelerated

depr. deducted for I/T                                     ($36,000)

Taxable Income – 2015                                  $ 164,000

Prepare a schedule to show the derivation of the deferred tax liability at the end of 2015.

	2015	2016	2017
Future taxable amounts
Tax Rate
Deferred Tax Liability
Beg. Bal. of deferred tax lia.
Ending bal. of deferred tax lia
Changes in deferred tax lia

Answer 1

• All working forms part of the answer
• Temporary difference of $ 36,000 will create Deferred Tax Liabilities in 2015 that will be reversed in 2016 and 2017.
• The flow in which the said DTL will get reversed in provided below as asked:

Working		2015	2016	2017
A	Future taxable amounts	$                           36,000.00	$                        13,000.00	$                                              -
B	Tax Rate	30%	25%	25%
C=A x B	Deferred Tax Liability	$                           10,800.00	$                          3,250.00	$                                              -
D = Last years' 'E'	Beg. Bal. of deferred tax lia.	$                                          -	$                        10,800.00	$                                 3,250.00
E=C	Ending bal. of deferred tax lia	$                           10,800.00	$                          3,250.00	$                                              -
F= E - D	Changes in deferred tax liabilities [Increase/(decrease)]	$                           10,800.00	$                        (7,550.00)	$                               (3,250.00)