Question
BE-2 Oxford Corporation began operations in 2010 and reported pretax financial income of $225,000 for the year. Oxfords tax depreciation exceeded its book depreciation by
BE-2 Oxford Corporation began operations in 2010 and reported pretax financial income of $225,000 for the year. Oxfords tax depreciation exceeded its book depreciation by $40,000. Oxfords tax rate for 2010 and years thereafter is 30%. In its December 31, 2010 balance sheet, what amount of deferred tax liability should be reported?
BE-3 Using the information from BE-2, assume this is the only difference between Oxfords pretax financial income and taxable income. Prepare the journal entry to record the income tax expense, deferred income taxes, and income tax payable, and show how the deferred tax liability will be classified on the December 31, 2010, balance sheet.
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