At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%. Required: a. Prepare the journal entry(s) to record income taxes during the period. b.How much will income tax expense be shown in the income statement?
At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%.
Required:
a. Prepare the
b.How much will income tax expense be shown in the income statement?
c.
The temporary difference arises when the taxable income according to the accounting record is different from taxable as per tax rules. The tax liability of the taxpayer is determined based on taxable income as per tax return. The temporary difference normally arises because of the tax basis if the asset or liability is different from the book value.
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