The Tanner Corporation begins operations in 2006 and reports the following amounts of pretax financial income and taxable income for the years 2006 through 2010. The company has only one temporary difference, and only one originating or reversing difference occurs in any single year. The company is subject to a tax rate of 30% for all the years.

Required
1. Prepare the income tax journal entry for each year.
2. What do you notice about the balance in the deferred taxes over the fiveyears?

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lear 2006 2007 2008 2009 2010 Pretax Financial Income $70,000 85,000 90,000 82,000 93,000 Taxable Income S 50,000 75,000 90,000 92,000 113,000