E18.11 (LO 1, 2) (One Difference, Multiple Rates, Effect of Beginning Balance vs. No Beginning Deferred Taxes) At the end of 2025, Wasicsko AG has €180,000 of cumulative temporary differences that will result in reporting future taxable amounts as follows.

2026 € 70,000 2027 50,000 2028 40,000 2029 20,000

€180,000 Tax rates enacted as of the beginning of 2024 are:

2024 and 2025 40%

2026 and 2027 30%

2028 and later 25%

Wasicsko’s taxable income for 2025 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 2025, assuming that there were no deferred taxes at the end of 2024.

b. Prepare the journal entry for Wasicsko to record income taxes payable, deferred income taxes, and income tax expense for 2025, assuming that there was a balance of €22,000 in a Deferred Tax Liability account at the end of 2024.