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 $480,000 and a tax basis of $325,000. There were no other temporary differences and no permanent differences. Taxable income was $7 million and Karas tax rate is 40%. 1. What is the deferred tax liability to be reported in the balance sheet? (Enter your answer in whole dollars.) 2. Assume that the deferred tax liability balance was $53,600 the previous year. Prepare the appropriate journal entry to record income taxes this year. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) |
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