ACCT 302 Deferred Tax Problem The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2014, its first year of operations. The enacted income tax rate is 30% for 2013-2017 and 35% for 2018. Pretax accounting income Excess tax depreciation Litigation liability accrual Unearned rent revenue deferred on the books but appropriately recognized in taxable income Interest income from tax exempt New York municipal bonds $700,000 320,000 70,000 80,000 20,000 1. Excess tax depreciation will reverse equally over a four-year period, 2015-2018. 2. It is estimated that the litigation liability will be paid in 2018. 3. Rent revenue will be recognized during the last year of the lease, 2018. 4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2018. Required: (a) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2014. (b) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2015 assuming taxable income is $500,000. (c) What is the cumulative temporary difference related to deferred tax assets and deferred tax liabilities at the end of 2016?