Calculation of Current Income Taxes - Question 2 DEF Co. DEF Co, has: 2014 Accounting income 2014 Tax rate $260,000 28% Included in DEF Co.'s accounting income is the following 1. DEF Co. collects rents in advance of $25,000. Rents are taxable in the period when they are received. For accounting, this rent advance will be recognized in the 2015 fiscal year 2. Warranty expenses accrued for accounting was $60,000. DEF Co. spent $15,000 cash servicing these warranties. Warranty costs are not tax deductible until they are paid. 3. There are assets for which depreciation and CCA are both calculated on a straight-line basis. The period is shorter for tax; as such the CCA was $5,000 greater than accounting depreciation in 2014. 4. There were non-taxable proceeds received from a life insurance company because of the death of a key officer of DEF Co. These proceeds totaled $55,000 5. Estimated losses on lawsuits are accrued for accounting purposes and totaled $75,000 in 2014. These losses will be tax deductible in the period the lawsuit is settled. 6. An impaiment loss was recorded on goodwill in the current year. This was $6,500 REQUIRED: 1. Calculate current income tax expense. (Begin with accounting income and add or deduct the above temporary or permanent differences) 2. Prepare the journal entry to record current income tax expense. LG C