Calculating Deferred Tax Balance Evergreen Company's reconciliation between pretax GAAP income and taxable income follows for the year. Pretax GAAP income $240,000 (48,000). Depreciation adjustment Permanent difference 1,500 $193,500 Taxable income The company had one temporary difference due to the GAAP basis of equipment exceeding the tax basis of equipment. Record the income tax journal entry for the year, assuming a tax rate of 25%. Assume that the January 1 deferred tax liability balance was $6,000. • Note: Round amounts to the nearest whole dollar. Date Dec. 31 Account Name Income Tax Expense Deferred Tax Liability Income Tax Payable To record income tax expense. > > > Dr. ooo 0 0 Cr. 0x 11,625 x 48,375 ✔

Calculating Deferred Tax Balance Evergreen Company's reconciliation between pretax GAAP income and taxable income follows for the year. Pretax GAAP income $240,000 (48,000). Depreciation adjustment Permanent difference 1,500 $193,500 Taxable income The company had one temporary difference due to the GAAP basis of equipment exceeding the tax basis of equipment. Record the income tax journal entry for the year, assuming a tax rate of 25%. Assume that the January 1 deferred tax liability balance was $6,000. • Note: Round amounts to the nearest whole dollar. Date Dec. 31 Account Name Income Tax Expense Deferred Tax Liability Income Tax Payable To record income tax expense. > > > Dr. ooo 0 0 Cr. 0x 11,625 x 48,375 ✔

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $220,000 Permanent difference (14,200) 205,800 Temporary difference - depreciation (21,000) Taxable income $ 184,800 Tringali's tax rate is 25 %. Assume that no estimated taxes have been paid. What should Tringali report as its income tax expense for its first year of operations?
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Unity’s effective income tax rate for 2002 is 32%. The depreciation difference will reverse in equal amounts over the next three years at an enacted tax rate of 32%. In Unity’s 2002 income statement, what amount should be reported as the current portion of its provision for income taxes?
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