Required: - Prepare the journal entry to recognize Baginski’s 2025 tax expense or tax benefit. - Show the lower portion of the 2025 income statement that reports income tax expense or benefit.

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Q: 1. Prepare the journal entry to recognize Baginski's 2025 tax expense or tax benefit. 2. Show the…

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.