Fox Corporation purchased a machine on January 1 of Year 1 that cost $64,000. The machine had an estimated service life of five years and no residual value. Fox uses straight-line depreciation for accounting purposes and accelerated depreciation for the income tax return as follows: Year 1, 30%; Year 2, 25%; Year 3, 20%; Year 4, 15%; and Year 5, 10%. Taxable income on the tax return for Year 1 was $240,000. The Year 1 income statement also showed a $24,000 expense for premiums paid for life insurance policies on company executive officers. The income tax rate is 25% in Year 1 and 35% in all subsequent years. Accelerated Tax Depreciation Immediate Expensing for Tax Depreciation c. Repeat requirements a and b assuming instead that the machine is 100% expensed in Year 1 for tax purposes. a. Prepare a schedule to determine deferred tax balances on December 31 of Year 1 through Year 5 Note: Do not use negative signs with your answers. Equipment, Net Year 1 Year 2 Year 3 Year 4 Year 5 GAAP basis $ 0 $ 0 $ 0 $ 0 $ 0 Tax basis 0 0 0 0 0 Difference between GAAP and tax bases 0 0 0 0 0 Tax rate 35% 35% 35% 35% 135% $ 0 $ 0 $ 0 $ 0 $ 0 b. Record the income tax journal entry on December 31 of Year 1. Date Dec. 31, Year 1 Account Name To record income tax. > > > Dr. Cr. ooo 0 0 0 0 0 0