At the end of 2012, Wasicsko Company has $180,000 of cumulative temporary differences that will result in

Question:

At the end of 2012, Wasicsko Company has $180,000 of cumulative temporary differences that will result in reporting future taxable amounts as follows.

2013                 $ 70,000
2014                    50,000
2015                    40,000
2016                    20,000 
                        
$180,000 

Tax rates enacted as of the beginning of 2011 are:

2011 and 2012         40%
2013 and 2014         30%
2015 and later          25%

Wasicsko’s taxable income for 2012 is $340,000. Taxable income is expected in all future years.

Instructions
  (a) Prepare the journal entry for Wasicsko to record income taxes payable, deferred income taxes, and income tax expense for 2012, assuming that there were no deferred taxes at the end of 2011.
  (b) Prepare the journal entry for Wasicsko to record income taxes payable, deferred income taxes, and income tax expense for 2012, assuming that there was a balance of $22,000 in a Deferred Tax Liability account at the end of 2011.

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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0470587287

14th Edition

Authors: kieso, weygandt and warfield.

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