Deferred taxes Calculated tax expense, taxes payable and deferred tax amounts

wk1_deferred_tax_example_worksheet.xlsx

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Sheet1

Spreadsheet: Deferred Taxes Worksheet
Variables						Deferred tax entries
		Year 1	Year 2	Year 3	Total	2007 Entry	Debit	Credit
Pre-tax financial income		200,000	200,000	200,000	600,000	Income tax expense	60,000
Tax rate	30%					Income tax payable		90,000
						Deferred taxes	30,000	- 0
Temporary differences in income (tax - book)		Year 1	Year 2	Year 3	Total		90,000	90,000
Recognization of warranty expense		100,000	(50,000)	(50,000)	- 0
					- 0	2008 Entry	Debit	Credit
					- 0	Income tax expense	61,500
Total temporary differences		100,000	(50,000)	(50,000)	- 0	Income tax payable		46,500
						Deferred taxes	- 0	15,000
Permanent differences in income (tax - book)		Year 1	Year 2	Year 3	Total		61,500	61,500
Non-deductible life insurance premiums			5,000	5,000	10,000
					- 0	2009 Entry	Debit	Credit
					- 0	Income tax expense	61,500
Total permanent differences		- 0	5,000	5,000	10,000	Income tax payable		46,500
						Deferred taxes	- 0	15,000
							61,500	61,500
Calculations						Financial statements
Calculation of income tax expense		Year 1	Year 2	Year 3	Total
Pre-tax financial income (per book)		200,000	200,000	200,000	600,000	Income statement presentation	Year 1	Year 2	Year 3
Permanent differences		- 0	5,000	5,000	10,000	Income before taxes	200,000	200,000	200,000
Adjusted pre-tax financial income		200,000	205,000	205,000	610,000	Income tax expense
Tax rate		30%	30%	30%	30%	Current	90,000	46,500	46,500
Tax expense		60,000	61,500	61,500	183,000	Deferred	(30,000)	15,000	15,000
						Total	60,000	61,500	61,500
Calculation of income tax payable		Year 1	Year 2	Year 3	Total	Net income	140,000	138,500	138,500
Pre-tax financial income (per book)		200,000	200,000	200,000	600,000
Temporary differences		100,000	(50,000)	(50,000)	- 0	Selected balance sheet items	Year 1	Year 2	Year 3
Permanent differences		- 0	5,000	5,000	10,000	Assets
Taxable income (per tax)		300,000	155,000	155,000	610,000	Current deferred tax assets	15,000	15,000	- 0
Tax rate		30%	30%	30%	30%	Non-current deferred tax assets	15,000	- 0	- 0
Tax payable		90,000	46,500	46,500	183,000	Liabilities
						Current deferred tax liabilities	- 0	- 0	- 0
Calculation of deferred tax liabilities (assets)		Year 1	Year 2	Year 3		Non-current deferred tax liabilities	- 0	- 0	- 0
Current (reverses next year)		(50,000)	(50,000)	- 0
Tax rate		30%	30%	30%
Current deferred tax liability (asset)		(15,000)	(15,000)	- 0
Non-current		(50,000)	- 0	- 0
Tax rate		30%	30%	30%
Non-current deferred tax liability (asset)		(15,000)	- 0	- 0
Total deferred taxes		(30,000)	(15,000)	- 0