Over a recent three-year period, Travis Country Enter- prises (TCE) had the following pretax accounting income and taxable income amounts.

For each year, the difference between TCE€™s pretax accounting income and its taxable income was due to its use of different depreciation methods for financial accounting and taxation purposes. Recently, a local attorney, who is a new member of TCE€™s board of directors, reviewed the company€™s financial records. At the next board meeting, this individual suggested that the use of different accounting methods for financial accounting and taxation purposes was, in her opinion, unethical.
Required:
(a) Is it unethical to use different accounting methods for financial accounting and taxation purposes? Why or why not?
(b) TCE€™s effective tax rate in recent years has been 40 percent for both financial accounting and taxation purposes. Compute the company€™s income tax expense and income taxes payable for Years 1€“3. Some of the temporary differences from years 1 and 2 reversed in year 3.
(c) Prepare an appropriate journal entry to record TCE€™s income tax expense for Years 1€“3.

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Year 1 Year 2 Year 3 Accounting Income $880,000 950,000 740,000 Pretax Taxable Income $760,000 820,000 980,000