The following information is available for McKee Corporation for 2015. 1. Excess of tax depreciation over book
Question:
The following information is available for McKee Corporation for 2015.
1. Excess of tax depreciation over book depreciation, £40,000. This £40,000 difference will reverse equally over the years 2016–2019.
2. Deferral, for book purposes, of £25,000 of rent received in advance. The rent will be recorded as revenue in 2016.
3. Pretax financial income, £350,000.
4. Tax rate for all years, 40%.
Instructions
(a) Compute taxable income for 2015.
(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015.
(c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016, assuming taxable income of £325,000.
Step by Step Answer:
Intermediate Accounting IFRS Edition
ISBN: 9781118443965
2nd Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield