The following information is available for the first three years of operations for Jetson Company:

1. Year Taxable Income:

2017 $250,000

2018 180,000

2019 200,000

2. On January 2, 2017, heavy equipment costing $500,000 was purchased. The equipment had a life of 5 years and no salvage value. The straight-line method of depreciation is used for book purposes and CCA at 30% is used for tax purposes (subject to the half year rule for the first year).

3. On January 2, 2018, $360,000 was collected in advance for rental of a building for a three-year period. The entire $360,000 was reported as taxable income in 2018, but $240,000 of the $360,000 was reported as unearned revenue at December 31, 2018 for book purposes.

4. The enacted tax rates are 40% for all years.

Instructions:

(a) Prepare a schedule comparing depreciation for book purposes with CCA for tax purposes. (subject to the half year rule for the first year).

(b) Determine the deferred tax (asset) or liability at the end of 2017.

(c) Prepare a schedule of future taxable and (deductible) amounts at the end of 2018.

(d) Prepare a schedule of the deferred tax (asset) and liability at the end of 2018.

(e) Compute the net deferred tax expense (benefit) for 2018.

(f) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2018.

Answer rating: 100% (QA)

Answer a Schedule of Depreciation for Book Purposes vs CCA for Tax Purposes Description 2017 2018 20... View the full answer