EMC began operations during 2004. Taxable income in 2005 was $829,000. Basis differences as of 12/31/04 and 12/31/05 are as follows:

The enacted income tax rate is 40% for 2004 and all future years.
Requirement:
Prepare the income tax journal entries that EMC should make for the year ended 12/31/05. You can ignore the current or non-current classification of DTAs and DTLs for this problem.

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Description of difference Property, Plant, & Equipment, net: GAAP basis 12/31/04 12/31/05 $1,102,000 1.000.000 $102,000 $1,880,000 1.800.000 $80,000 Tax basis Basis difference Investments – Trading GAAP basis (fair value) Tax basis (cost or amortized cost) Basis difference $785,000 903.000 ($118,000) $823,000 948.000 ($125,000)