P19-3 (Second Year of Depreciation Difference, Two Differences, Single Rate, Extraordinary Item) The following information has been obtained for the Gocker Corporation. 1.Prior to 2012, taxable income and pretax financial income were identical. 2.Pretax financial income is $1,700,000 in 2012 and $1,400,000 in 2013. 3.On January 1, 2012, equipment costing $1,200,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.) 4.Interest of $60,000 was earned on tax-exempt municipal obligations in 2013. 5.Included in 2013 pretax financial income is an extraordinary gain of $200,000, which is fully taxable. 6.The tax rate is 35% for all periods. 7.Taxable income is expected in all future years. Compute taxable income and income tax payable for 2013. Taxable income $ Income tax payable $ Prepare the journal entry to record 2013 income tax expense, income tax payable, and deferred taxes. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit Income tax payableDeferred tax assetDeferred tax liabilityIncome tax expense Deferred tax assetIncome tax payableIncome tax expenseDeferred tax liability Deferred tax assetIncome tax expenseDeferred tax liabilityIncome tax payable Income tax payableDeferred tax liabilityDeferred tax assetIncome tax expense Prepare the bottom portion of Gocker's 2013 income statement, beginning with Income before income taxes and extraordinary item. Extraordinary gainIncome tax expenseNet incomeDeferredApplicable income taxIncome before inc. taxes & extra. item $ Applicable income taxNet incomeIncome tax expenseDeferredIncome before inc. taxes & extra. itemExtraordinary gain Current $ Applicable income taxExtraordinary gainIncome tax expenseDeferredNet incomeIncome before inc. taxes & extra. item Income before extraordinary item Net incomeIncome before inc. taxes & extra. itemDeferredApplicable income taxExtraordinary gainIncome tax expense Less: Extraordinary gainApplicable income taxIncome before inc. taxes & extra. itemNet incomeIncome tax expenseDeferred Extraordinary gainApplicable income taxNet incomeIncome tax expenseDeferredIncome before inc. taxes & extra. item $ Indicate how deferred income taxes should be presented on the December 31, 2013, balance sheet. Deferred tax assetCurrent liabilitiesLong-term liabilitiesDeferred tax liability Deferred tax liabilityLong-term liabilitiesDeferred tax assetCurrent liabilities $