Recording Income Tax with Changing Tax Rates The Jets Company recorded a deferred tax liability of $18,750 on December 31 of Year 1, due to the book value of equipment exceeding the tax basis of equipment by $75,000. The difference will reverse equally ver the next three years. In late Year 1, the enacted tax rate increased to 42.5% beginning in Year 3. . Determine the income tax rate that is the enacted rate for Year 1. ncome tax rate for Year 1: 42.5 96 - What journal entry should the Jets record to adjust the deferred tax liability, if any, on December 31 of Year 1? Reversal of difference between GAAP and tax bases $ ax rate Deferred tax liability Date sec. 31, Year 1 Account Name $ Year 2 v 0$ 0% 0$ Dr. 0 Year 3 Cr. 0 0 $ 0% 0$ Year 4 0 0% 0$ Total 0
Recording Income Tax with Changing Tax Rates The Jets Company recorded a deferred tax liability of $18,750 on December 31 of Year 1, due to the book value of equipment exceeding the tax basis of equipment by $75,000. The difference will reverse equally ver the next three years. In late Year 1, the enacted tax rate increased to 42.5% beginning in Year 3. . Determine the income tax rate that is the enacted rate for Year 1. ncome tax rate for Year 1: 42.5 96 - What journal entry should the Jets record to adjust the deferred tax liability, if any, on December 31 of Year 1? Reversal of difference between GAAP and tax bases $ ax rate Deferred tax liability Date sec. 31, Year 1 Account Name $ Year 2 v 0$ 0% 0$ Dr. 0 Year 3 Cr. 0 0 $ 0% 0$ Year 4 0 0% 0$ Total 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
7
Transcribed Image Text:Recording Income Tax with Changing Tax Rates
The Jets Company recorded a deferred tax liability of $18,750 on December 31 of Year 1, due to the book value of equipment exceeding the tax basis of equipment by $75,000. The difference will reverse equally
over the next three years. In late Year 1, the enacted tax rate increased to 42.5% beginning in Year 3.
a. Determine the income tax rate that is the enacted rate for Year 1.
Income tax rate for Year 1: 42.5
%
b. What journal entry should the Jets record to adjust the deferred tax liability, if any, on December 31 of Year 1?
Reversal of difference between GAAP and tax bases $
Tax rate
Deferred tax liability
Date
Dec. 31, Year 1
Check
Account Name
To adjust the deferred tax liability,
$
Year 2
>
>
0 $
0%
0 $
Dr.
0
0
Year 3
Cr.
0
0
0 $
0%
0 $
Year 4
0
0%
0 $
Total
0
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education