1) Listed below are independent situations. For each situation indicate (by letter) whether it will create (A) a

deferred tax asset, (L) a deferred tax liability, or (N) neither.:

Organization costs reported in the income statement but amortized and deducted over five

years for tax purposes.

Premiums paid on life insurance policies covering key corporate executives

Warranty expense, tax deductible when paid.

Prepaid expenses, tax deductible when paid.

Fines and penalties due to violations of law.

An operating loss carryforward

2) Several years ago, GM Corporation purchased equipment for $23,500,000. GM uses straight-line

depreciation for financial reporting and accelerated depreciation for tax purposes. At December 31, 2023,

the carrying value of the equipment was $21,150,000 and its tax basis was $17,625,000. At December 31,

2024, the carrying value of the equipment was $18,800,000 and the tax basis was $12,925,000. There

were no other temporary differences and no permanent differences. Pretax accounting income for the

current year was $28,500,000. A tax rate of 25% applies to all years.

Prepare the journal entry to record GMs income tax expense for the current year.

Solve and show all work please