Refer to Practice 16-5. Assume that on January 1, 2015, Congress changes the enacted tax rate. Make the journal entry necessary to record this tax rate change on January 1, 2015, assuming that
(1) The new tax rate is 30% and
(2) The new tax rate is 43%.
In Practice 16-5
On January 1, 2013, the company purchased a piece of equipment for $75,000. The equipment has a 5-year useful life and $0 residual value. The company uses straight-line depreciation for financial accounting purposes. Assume that the depreciation deduction for income tax purposes is as follows: 2013 = $25,000; 2014 = $20,000; 2015 = $15,000; 2016 = $10,000; and 2017 = $5,000. Assume that revenue in each year 2013-2017 is $50,000, that the revenue is the same for both tax and financial reporting purposes, and that the only expenses are depreciation and income taxes. The income tax rate is 40% in all years. Prepare the journal entry or entries to record income tax expense in each year 2013-2017.