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Copernic Corporation recorded warranty accruals. Warranty expense is tax deductible only when the cost are incurred (payment made to customers for instance or repairments). As
Copernic Corporation recorded warranty accruals. Warranty expense is tax deductible only when the cost are incurred (payment made to customers for instance or repairments). As at December 2020, the warranty liability has a balance of $150,000. This temporary difference will cause a reverse of $50,000 in 2021, $35,000 in 2022, and $65,000 in 2023. Copernic's accounting income for 2020 is $135,000 and the tax rate is 25% for the years 2020 and 2021 and 30% for next years. There are no deferred tax accounts at the beginning of 2020. Required a. Calculate the deferred tax balance at December 31, 2020 (use a schedule to answer (a)). b. Calculate taxable income and current income tax payable for 2020. c. Prepare the journal entries to record income taxes for 2020. d. Prepare the income tax expense section of the income statement for 2020, beginning with the line Income before income tax
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