Chapter 19, Problem 7P

To determine

Temporary differences: The difference between the actual taxable liability and the books of records maintained by the individual, firm or an entity is termed as temporary difference. The difference is created due to the tenure of transactions or actual performance of transactions, flow of funds into the business or changes in the value of the asset or liability due to business situations. These differences are adjustable in future when the appropriate time for the transaction arises.

Taxable income: Income that is computed after deducting all allowable or permissible deductions from the pretax financial income is called taxable income. In other words the income which is eligible for computing the tax liability is taxable income.

• (a)

To determine and record the journal entries for the income tax expenses.

To determine

• (b)

To determine and record the deferred tax liability in the balance sheet.

To determine

• (c)

To determine the net income for the year 2017- 2019.