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please explicitly include all work and formulas used- thank you! Computing and Reporting Deferred Income Taxes Early in January 2019, Oler, Inc., purchased equipment costing
please explicitly include all work and formulas used- thank you!
Computing and Reporting Deferred Income Taxes Early in January 2019, Oler, Inc., purchased equipment costing $40,000. The equipment had a 2-year useful life and was depreciated in the amount of $20,000 in 2019 and 2020 Oler deducted the entire $40,000 on its tax return in 2019. This difference was the only one between its tax return and its financial statements. Oler's income before depreciation expense and income taxes was $590,000 in 2019 and $612,500 in 2020. The tax rate in each year was 25%. Required a. What amount of deferred tax liability should Oler report in 2019 and 2020? 2019 $ 0x 2020 $ 0 b. Prepare the journal entries to record income taxes for 2019 and 2020. Credit 0 OX OX General Journal Description Debit Income tax expense 0 x Income taxes payable Deferred tax liability 0 To record income taxes for 2019. Income tax expense Ox Deferred tax liability Income taxes payable 0 To record income taxes for 2020. 0 % c. Repeat requirement b if in 2019 the U.S. enacts a permanent tax rate change to be effective in 2020; the rate will increase to 35%. General Journal Description Debit Credit Income tax expense 0x Income taxes payable 0 OX Deferred tax liability 0 0x To record income taxes for 2019. Income tax expense 0 x Deferred tax liability 0 x Income taxes payable 0 To record income taxes for 2020Step by Step Solution
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