salvage value. The depreciation schedule for GAAP and tax purposes follows. Year GAAP Depreciation Tax Depreciation Year 1 $100,000 Year 2 152,000 Year 3 148,000 Year 4 Year 5 $80,000 80,000 80,000 80,000 80,000 0 0 The tax rate for Year 1 through Year 3 is 25%, but a new law is passed in Year 1 that will raise the tax rate in Year 4 and thereafter to 30%. Pretax GAAP income equals $480,000 in Year 1 and Year 2. There are no other differences between pretax GAAP income and tax income. Required a. Record the income tax journal entry on December 31 of Year 1 (assuming the original tax depreciation schedule provided).

salvage value. The depreciation schedule for GAAP and tax purposes follows. Year GAAP Depreciation Tax Depreciation Year 1 $100,000 Year 2 152,000 Year 3 148,000 Year 4 Year 5 $80,000 80,000 80,000 80,000 80,000 0 0 The tax rate for Year 1 through Year 3 is 25%, but a new law is passed in Year 1 that will raise the tax rate in Year 4 and thereafter to 30%. Pretax GAAP income equals $480,000 in Year 1 and Year 2. There are no other differences between pretax GAAP income and tax income. Required a. Record the income tax journal entry on December 31 of Year 1 (assuming the original tax depreciation schedule provided).

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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