The following facts relate to McKane Corporation. 1. Deferred tax liability, January 1, 2019, $60,000. 2. Deferred

Question:

The following facts relate to McKane Corporation.

1. Deferred tax liability, January 1, 2019, $60,000.

2. Deferred tax asset, January 1, 2019, $20,000.

3. Taxable income for 2015, $115,000.

4. Cumulative temporary difference at December 31, 2019, giving rise to future taxable amounts, $210,000.

5. Cumulative temporary difference at December 31, 2019, giving rise to future deductible amounts, $95,000.

6. Tax rate for all years, 40%. No permanent differences exist.

7. The company is expected to operate profitably in the future.


Instructions

a. Compute the amount of pretax financial income for 2019.

b. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019.

c. Prepare the income tax expense section of the income statement for 2019, beginning with the line "Income before income taxes."

d. Compute the effective tax rate for 2019.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 978-1119372936

3rd edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Question Posted: