Microsoft Inc. reported taxable income for the years 2021 and 2022 as follows.

Year	Amount
2021	(130,000)
2022	208,000

The enacted tax rate is 25%. There are no differences between taxable income/loss and GAAP income/loss. Management believes that the full amount of tax loss carryforwards benefit is more likely than not to be realized. Net operating loss carry backs are no longer allowed. The company’s fiscal year end December 31.

Required:

a. Prepare the journal entries to record income tax expense for the years 2021 and 2022. Show all calculations in the explanations.

b. Indicate clearly what would be reported on the income statement beginning with income before income taxes for the year ended December 31, 2022 from just the journal entries you prepared in part a.

c. Indicate clearly what would be reported on the classified balance sheet as of December 31, 2022 from just the journal entries you prepared in part a.

d. Provide the breakdown of income tax expense needed for footnote disclosure.

Answer rating: 100% (QA)

a Journal entries to record income tax expense Year 2021 Income Tax Expense 32500 Deferred Tax Asset ... View the full answer