p*Pension amounts are tax deductible when paid, not when expected. Over the long term, payments will equal total expense. The Tax basis for the pension will always be zero. For accounting purposes, there will be a statement of financial position asset account asset called "deferred pension cost" for the difference between the amount paid and the expense, since the amount paid is higher.

REQUIRED:

Prepare the journal entry to record income tax expense for each year.
 

Transcribed Image Text:

Crandall Corp. was formed in 20X1. Relevant information pertaining to 20X1, 20X2, and 20X3 is as follows: Earnings before income tax Accounting income includes the following: Depreciation (assets have a cost of $120,000) Pension expense* Warranty expense Dividend income (nontaxable) Taxable income includes the following: Capital cost allowance Pension funding (amount paid) Warranty costs paid Tax rate-enacted in each year Crandall Corp. was formed in 20X1. Relevant information pertaining to 20X1, 20X2, and 20X3 is as follows: Earnings before income tax Accounting income includes the following: Depreciation (assets have a cost of $120,000) Pension expense* Warranty expense Dividend income (nontaxable) Taxable income includes the following: Capital cost allowance Pension funding (amount paid) Warranty costs paid Tax rate-enacted in each year

Answer rating: 100% (QA)

Amount in Particulars 20X1 20X2 20X3 Earning before Income tax 100000 100000 100000 Adjustments Divi... View the full answer