(a) Prepare a table of future taxable and deductible amounts. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2018, assuming an income tax rate of 40% for all years.
XYZ Co. at the end of 2018, its first year of operations, prepared a reconciliation between
pretax financial income and taxable income as follows:
Pretax financial income € 750,000
Estimated expenses deductible for taxes when paid 1,200,000
Extra depreciation (1,350,000)
Taxable income € 600,000
Estimated warranty expense of €800,000 will be deductible in 2019, €300,000 in 2020, and
€100,000 in 2021. The use of the
in each of the next three years.
Instructions
(a) Prepare a table of future taxable and deductible amounts.
(b) Prepare the
income taxes payable for 2018, assuming an income tax rate of 40% for all years.
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