1120-US: Balance Sheet and Book Income adjustments for tax accrual (FAQ)

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Question

How does the federal, state and city tax accrual adjustments affect the balance sheet and book income?

Answer

Balance Sheet prepaid and accrued accounts:

  • If you enter X in the Accrue federal income tax checkbox in Screen TaxAc1 in the Tax Accrual folder, UltraTax CS/1120 subtracts the amount entered in the Prepaid federal income tax - end year field in Screen L from the amount entered in the Federal income tax payable - end year field in Screen L-2 and adds the federal income tax accrual adjustment to make one net adjustment. If the net adjustment is positive, the amount is added to Schedule L, Other current liabilities. If the net adjustment is negative, the amount is added to Schedule L, Other current assets.
  • If you enter X in the Accrue state and city tax checkbox in Screen TaxAc1, UltraTax CS/1120 subtracts the amount entered in the Prepaid state tax - end year field in Screen L from the amount entered in the State tax payable - end year field in Screen L-2 and adds the state tax accrual adjustment to make one net adjustment. If the net adjustment is positive, the amount is added to Schedule L, Other current liabilities. If the net adjustment is negative, the amount is added to Schedule L, Other current assets.

Book income:

  • UltraTax CS/1120 automatically adjusts the amount you enter in the Net income (loss) per books – Force field in Screens Mc/Ms by the federal income tax accrual adjustment when you enter X in the Accrue federal income tax field in Screen TaxAc1 in the Tax Accrual folder.
  • The net income (loss) per books is also adjusted by the state and city tax accrual adjustment when you enter X in the Accrue state and city tax and Adjust balance sheet and net income per books for state and city tax accrual adjustment fields in Screen TaxAc1 in the Tax Accrual folder.

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1120-US: Tax accrual FAQs

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