Clothing, Inc. acquired a new fabric-cutting machine at the beginning of the current year. The machine cost $ 450,000, with no residual value expected. Fancy Fashion uses the straight-line method for financial reporting assuming a six-year useful life. The firm classifies the equipment as five-year MACRS property for tax purposes using the following percentages.

MACRS %
20.00	%
32.00	%
19.20	%
11.52	%
11.52	%
5.76	%

The company is subject to a 35% income tax rate and has no other book-tax differences. We present Fancy Fashion's income before tax and depreciation below:

Income Before Tax
Year	and Depreciation
1	$800,000
2	845,000
3	860,000
4	950,000
5	1,125,000
6	1,500,000

Prepare all journal entries required to record Fancy Fashion's income tax provision for years 3 and 4.

What is the balance of the deferred tax account at the end of year 3?

	What is reported net income for years 3 and 4? Requirement a. Prepare all journal entries required to record Fancy Fashion's income tax provision for years 3 and 4. Begin by completing the table below to compute book and tax depreciation through year 4.