At the end of 2022, Valerie Corporation reported a deferred tax liability of $41,000. At the end

Question:

At the end of 2022, Valerie Corporation reported a deferred tax liability of $41,000. At the end of 2023, the company had $241,000 of temporary differences related to property, plant, and equipment. Depreciation expense on this property, plant, and equipment has been lower than the CCA claimed on Valerie’s income tax returns. The resulting future taxable amounts are as follows:

The tax rates enacted as of the beginning of 2022 are as follows: 31% for 2022 and 2023; 30% for 2024 and 2025; and 25% for 2026 and later. Taxable income is expected in all future years.

Instructionsa. Calculate the deferred tax account balance at December 31, 2023.

b. Prepare the journal entry for Valerie to record deferred taxes for 2023.

c. Early in 2024, after the 2023 financial statements were released, new tax rates were enacted as follows: 29% for 2024 and 27% for 2025 and later. Prepare the journal entry for Valerie to recognize the change in tax rates.

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