Typical Corporation reported a deferred tax liability of $3,600,000 for the year ended December 31, 2023, when the tax rate was 25%. The deferred tax liability was related to a temporary difference of $14,400,000 caused by an installment sale in 2023. The temporary difference is expected to reverse in 2025 when the income deferred from taxation will become taxable. There are no other temporary differences. Assume a new tax law passed in 2024 and the tax rate, which will remain at 25% through December 31, 2024, will become 48% for tax years beginning after December 31, 2024. Pretax accounting income and taxable income for the year 2024 is $24,000,000. Required: Prepare a compound journal entry to record Typical's income tax expense for the year 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Typical Corporation reported a deferred tax liability of $3,600,000 for the year ended December 31, 2023, when the tax rate was 25%. The deferred tax liability was related to a temporary difference of $14,400,000 caused by an installment sale in 2023. The temporary difference is expected to reverse in 2025 when the income deferred from taxation will become taxable. There are no other temporary differences. Assume a new tax law passed in 2024 and the tax rate, which will remain at 25% through December 31, 2024, will become 48% for tax years beginning after December 31, 2024. Pretax accounting income and taxable income for the year 2024 is $24,000,000. Required: Prepare a compound journal entry to record Typical's income tax expense for the year 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

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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