Zekany Corporation would have had identical income before taxes on both its income tax returns and income
Question:
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2024 through 2027 except for differences in depreciation on an operational asset. The asset cost $120,000 and is depreciated for income tax purposes in the following amounts:
The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows:
Assume the income tax rate for 2024 and 2025 was 30%; however, during 2025, tax legislation was passed to raise the tax rate to 40% beginning in 2026. The 40% rate remained in effect through the years 2026 and 2027. Both the accounting and income tax periods end December 31.
Required:
Prepare the journal entries to record income taxes for the years 2024 through 2027.
Step by Step Answer:
Pretax accounting income Depreciation for tax Taxable Income Tax rate Tax payable Straightline Tax d...View the full answer
