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At December 31, 2016, Wonderland Company had a current deferred tax asset of $60,000, arising from cash for software subscriptions received and taxed in 2016
At December 31, 2016, Wonderland Company had a current deferred tax asset of $60,000, arising from cash for | ||||
software subscriptions received and taxed in 2016 but that will be recognized as income for accounting purposes in | ||||
2017; a non-current deferred tax liability of $160,000 arising from an excess of MACRS tax depreciation over | ||||
straight-line accounting depreciation of plant assets; and a long-term deferred tax asset of $80,000, arising from | ||||
contingency expenses for accounting purposes that will be tax deductible when paid (estimated to be in 2018). The | ||||
2017 pretax financial income and taxable income for Wonderland are as follows: | ||||
Pretax financial income | $ 700,000 | |||
Estimated bad debt expense | $ 60,000 | |||
Software subscriptions earned (cash received in 2016) | $ (200,000) | |||
Rent received in advance | $ 120,000 | |||
Excess of MACRS tax depreciation over straight-line book depreciation | $ (200,000) | |||
Taxable income | $ 480,000 | |||
The income tax rate for all years | 35% | |||
Required: | ||||
Prepare the income tax journal entry for the Wonderland Company at the end of 2017 | ||||
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