(18-III-3) Please help me solve this problem and provide an explanation.

Recording Temporary Difference, Multiple Tax Rates A plant asset purchased by Krest Inc. for $900,000 late in Year 1 is to be depreciated as follows. Year Tax Depreciation GAAP Depreciation Year 2 $360,000 $180,000 Year 3 270,000 180,000 Year 4 180,000 180,000 Year 5 90,000 180,000 Year 6 0 180,000 $300,000 $900,000 In Year 3, taxable income is $4,050,000, and the tax rate is 25%. Recently enacted tax rates follow: Year 4: 25%; Year 5: 30%; and Year 6: 30%. The deferred tax liability balance on January 1 of Year 3 is $45,000. Required a. Prepare a schedule to compute the deferred tax balance on December 31 of Year 3. eNote: Do not use negative signs with your answers. Year 4 Year 5 Year 6 Total Reversal of difference between GAAP and tax bases $ 0% 0% 0% 0 Tax rate 25% 30% 30% Deferred tax liability $ 03 03 03 0 b. Calculate the tax basis of the plant asset on December 31 of Year 3 and its reported amount in the financial statements. Tax basis of plant asset, Dec. 31, Year 3: % O GAAP basis of plant asset, Dec. 31, Year 3: | 0 c. Prepare the journal entry to record income tax expense in Year 3. Date Account Name Dr. Cr. Dec. 31, Year 3 v N Av To record income tax expense c. Prepare the journal entry to record income tax expense in Year 3. Date Account Name Dr. (o Dec. 31, Year 3 |ncome Tax Expense ~ 1,138,500 0 x Deferred Tax Liability v 0 126,000 x Income Tax Payable v 0 1,012,500 v To record income tax expense