E18.8 (LO 1, 2, 4) (Two Temporary Differences, One Rate, 3 Years) Jeonbuk Ltd. has two temporary differences between its income tax expense and income taxes payable. The information is shown below.

2024 2025 2026 Pretax financial income W840,000,000 W910,000,000 W945,000,000 Excess depreciation expense on tax return (30,000,000) (40,000,000) (20,000,000)

Excess warranty expense in financial income 20,000,000 10,000,000 8,000,000 Taxable income W830,000,000 W880,000,000 W933,000,000 The income tax rate for all years is 40%.

Instructions

a. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2024, 2025, and 2026.

b. Assuming there were no temporary differences prior to 2024, indicate how deferred taxes will be reported on the 2026 statement of financial position. Jeonbuk’s product warranty is for 12 months.

c. Prepare the income tax expense section of the income statement for 2026, beginning with the line

“Pretax financial income.”