1) If a 76,000 balance in deferred tax asset was computed by use of 40% rate, what does the underlying cumulative temporary difference amount to?

2. Company facts:

Deferred tax liability 1/1/2015 = $40,000

Taxable income for 2015 = $95,000

Deferred tax asset 1/1/2015 = $0

Pretax financial income for 2017 = $200,000

Cumulative temporary difference on 12/31/2015, giving rise to future deductible amounts = $35,000

Cumulative temporary difference on 12/31/2015, giving rise to future taxable amounts = $240,000

Tax rate (all years = 40%

Company expected to operate profitably in future

a) Prepare journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015.

b) Prepare income tax expense section of income statement for 2015, beginning with the line "Income Before Income Taxes"