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North Dakota Corporation began operations in January 2018 and purchased a machine for $40,000. North Dakota uses straight-line depreciation over a ten-year period for financial
North Dakota Corporation began operations in January 2018 and purchased a machine for $40,000. North Dakota uses straight-line depreciation over a ten-year period for financial reporting purposes. According to the new tax law, for tax purposes, North Dakota applies accelerated depreciation of 100% in the first year. Pretax accounting income for 2018 was $200,000, which includes an expense for government fines of $50,000 which is not tax deductible. The enacted tax rate is 20% for all years.
- Prepare the appropriate journal entry to record North Dakota's 2018 income taxes.
- What is North Dakota's 2018 net income or loss?
- What should be the deferred tax asset or deferred tax liability balance at the end of 2019related to the purchased machine?
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