Early in January 2019, Oler, Inc., purchased equipment costing $16,000. The equipment had a 2-year useful life and was depreciated in the amount of $8,000 in 2019 and 2020. Oler deducted the entire $16,000 on its tax return in 2019. This difference was the only one between its tax return and its financial statements. Oler's income before depreciation expense and income taxes was $236,000 in 2019 and $245,000 in 2020. The tax rate in each year was 25%.

REQUIRED

a. What amount of deferred tax liability should Oler report in 2019 and 2020?

b. Prepare the journal entries to record income taxes for 2019 and 2020.

c. Repeat requirement b if in 2019 the U.S. enacts a permanent tax rate change to be effective in 2020; the rate will increase to 35%.