Melody Co has pretax financial income of 520,000 at the end of 2021. For tax purposes, depreciation was 1,200,000 higher than book (this will result in taxable amounts of $400K over the next three years) Estimated deductible expenses for tax for 890,000 (this will be deductible in 2024) The tax rate is 20% and will remain 20% over the next few years Step 1: Reconcile Book income to Tax - What is tax books income? Step 2: Create a schedule of future taxable and deductible amounts Step 3: Calculate tax expense, what are the DTA's and the DTL (Journal Entry)

Melody Co has pretax financial income of 520,000 at the end of 2021. For tax purposes, depreciation was 1,200,000 higher than book (this will result in taxable amounts of $400K over the next three years) Estimated deductible expenses for tax for 890,000 (this will be deductible in 2024) The tax rate is 20% and will remain 20% over the next few years Step 1: Reconcile Book income to Tax - What is tax books income? Step 2: Create a schedule of future taxable and deductible amounts Step 3: Calculate tax expense, what are the DTA's and the DTL (Journal Entry)

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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