At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%.

Required:

Prepare the journal entry(s) to record income taxes during the period.

How much will income tax expense be shown in the income statement?

ANSWER b):

What will be the balance sheet disclosure during the period regarding taxes?

ANSWER c):