Company A has pretax financial income of 520,000 at the end of 2021.

For tax purposes, depreciation was 1,200,000 higher than book (this will result in taxable amounts of $400K over the next three years)

Estimated deductible expenses for tax for 890,000 (this will be deductible in 2024)

The tax rate is 20% and will remain 20% over the next few years

Step 1: Reconcile Book income to Tax - What is tax books income?

Step 2: Create a schedule of future taxable and deductible amounts

Step 3: Calculate tax expense, what are the DTA's and the DTL (if it helps make the Journal Entry)