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.

1. Prepare the appropriate journal entry to record North Dakota's 2018 income taxes.

2. What is North Dakota's 2018 net income or loss?
3. 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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