At the end of 2022, Wasicsko AG has €180,000 of cumulative temporary differences that will result in reporting future taxable amounts as follows.

2023 .................... € 70,000
2024 .................... 50,000
2025 .................... 40,000
2026 .................... 20,000
.......................... €180,000

Tax rates enacted as of the beginning of 2021 are:

2021 and 2022 .............. 40%
2023 and 2024 .............. 30%
2025 and later .............. 25%

Wasicsko’s taxable income for 2022 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 2022, assuming that there were no deferred taxes at the end of 2021.

b. Prepare the journal entry for Wasicsko to record income taxes payable, deferred income taxes, and income tax expense for 2022, assuming that there was a balance of €22,000 in a Deferred Tax Liability account at the end of 2021.