The Banin Company was established in 2010. During this year it purchased one asset with five...

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The Banin Company was established in 2010. During this year it purchased one asset with five years of useful life. The asset is depreciated based on a straight-line method for financial reporting, and based on an (unspecified) accelerated method for tax reporting. In 2011, the Banin Company was fined $20,000 for unsportsmanlike conduct. The fine is not deductible for tax purposes. There were no other differences between financial and tax reporting over the years. Required: a. Assume the pretax financial income (based on GAAP) in 2010 was $160,000, the taxable income for 2010 (based on the tax code) was $100,000, and the tax rate was 30%. Provide the journal entry to record the income tax expense for 2010. b. In 2011 the pretax financial income (based on GAAP) was $140,000, the taxable income for the year (based on the tax code) was $130,000, and the tax rate remained at 30%. Provide the journal entry to record the income tax expense for 2011. What was the balance of the deferred tax asset/liability account at the end of 2011? c. During 2012 the tax rate was unexpectedly changed to 40%. Both the pretax financial income and the taxable income were $160,000. Provide the journal entry to record the income tax expense for 2012 and the balance of the deferred tax asset/liability account at the end of 2012. The Banin Company was established in 2010. During this year it purchased one asset with five years of useful life. The asset is depreciated based on a straight-line method for financial reporting, and based on an (unspecified) accelerated method for tax reporting. In 2011, the Banin Company was fined $20,000 for unsportsmanlike conduct. The fine is not deductible for tax purposes. There were no other differences between financial and tax reporting over the years. Required: a. Assume the pretax financial income (based on GAAP) in 2010 was $160,000, the taxable income for 2010 (based on the tax code) was $100,000, and the tax rate was 30%. Provide the journal entry to record the income tax expense for 2010. b. In 2011 the pretax financial income (based on GAAP) was $140,000, the taxable income for the year (based on the tax code) was $130,000, and the tax rate remained at 30%. Provide the journal entry to record the income tax expense for 2011. What was the balance of the deferred tax asset/liability account at the end of 2011? c. During 2012 the tax rate was unexpectedly changed to 40%. Both the pretax financial income and the taxable income were $160,000. Provide the journal entry to record the income tax expense for 2012 and the balance of the deferred tax asset/liability account at the end of 2012.

Answer rating: 100% (QA)

a The income tax expense for 2010 can be calculated as follows Taxable income 100000 Tax rate 30 Inc... View the full answer