On December 31, 2019, the Irwin Company's accounting records show an unadjusted $60,000 credit balance in...
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On December 31, 2019, the Irwin Company's accounting records show an unadjusted $60,000 credit balance in the Deferred Income Tax Liability account. The balance is related to the $150,000 difference between the December 31, 2018 recorded values of certain assets for book and income tax purposes. The company uses the straight-line depreciation method for financial statement purposes and accelerated methods for income tax purposes. The following additional information is available. Book Basis Income Tax Basis $ 900,000 $1,000,000 $450,000 $485,000 December 31, 2018 Assets December 31, 2019 Assets 2019 Pretax accounting income 2019 Taxable income The $115,000 difference between the book and income tax bases of the assets at December 31, 2019 is due to a combination of the depreciation methods and the company's equipment acquisitions and retirements. The $35,000 difference between the 2019 pretax accounting and taxable incomes is due to this one temporary difference and various permanent differences. The 2019 corporate tax rate is 40%; however, the enacted corporate tax rate will be 45% effective January 1, 2020 and is not expected to change in the foreseeable future. Account debited REQUIRED: Prepare the necessary journal entry to record the 2019 income tax expense and to adjust the deferred income tax account. Use the table format option in the answer space to add an element of structure to your answer. For example: Account credited . $$ $750,000 $885,000 14 On December 31, 2019, the Irwin Company's accounting records show an unadjusted $60,000 credit balance in the Deferred Income Tax Liability account. The balance is related to the $150,000 difference between the December 31, 2018 recorded values of certain assets for book and income tax purposes. The company uses the straight-line depreciation method for financial statement purposes and accelerated methods for income tax purposes. The following additional information is available. Book Basis Income Tax Basis $ 900,000 $1,000,000 $450,000 $485,000 December 31, 2018 Assets December 31, 2019 Assets 2019 Pretax accounting income 2019 Taxable income The $115,000 difference between the book and income tax bases of the assets at December 31, 2019 is due to a combination of the depreciation methods and the company's equipment acquisitions and retirements. The $35,000 difference between the 2019 pretax accounting and taxable incomes is due to this one temporary difference and various permanent differences. The 2019 corporate tax rate is 40%; however, the enacted corporate tax rate will be 45% effective January 1, 2020 and is not expected to change in the foreseeable future. Account debited REQUIRED: Prepare the necessary journal entry to record the 2019 income tax expense and to adjust the deferred income tax account. Use the table format option in the answer space to add an element of structure to your answer. For example: Account credited . $$ $750,000 $885,000 14
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To prepare the necessary journal entry to record the 2019 income tax expense and adjust the deferred income tax account you need to consider both the ... View the full answer
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
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