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The following hypothetical transactions relate to Nestlé S.A., the Swiss chocolate manufacturer. Indicate whether each transaction immediately gives rise to an asset of the company under U.S. GAAP and separately, under IFRS. If Nestlé recognizes an asset, state the account title, the amount, and the classification of the asset on the balance sheet as either a current asset or a noncurrent asset. Nestlé reports its results in millions of Swiss francs (CHF).
c. Nestlé pays a developer in the Czech Republic CHF6 million for an option to purchase a tract of land on which it intends to build a warehouse to serve the eastern European markets. The price of the land is CHF450 million.
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $800,000 and with an expected useful life of four years and no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was$900,000, which includes interest revenue of $20,000 from municipal bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 40%. Prepare the journal entry to record income taxes.