Question
Kara Fashions uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three years after its purchase, one of Karas buildings has
Kara Fashions uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three years after its purchase, one of Karas buildings has a book value of $1,080,000 and a tax basis of $810,000. There were no other temporary differences and no permanent differences. Taxable income was $6 million and Karas tax rate is 25%.
What is the deferred tax liability to be reported in the balance sheet? Assuming that the deferred tax liability balance was $37,000 the previous year, prepare the appropriate journal entry to record income taxes this year.
1. Deffered tax liability:
2. Journal Entry
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started