Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 16-4 (Algo) Change in tax rate; record taxes for four years [LO16-2, 16-6] Zekany Corporation would have had identical income before taxes on both

Problem 16-4 (Algo) Change in tax rate; record taxes for four years [LO16-2, 16-6]

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2024 through 2025 except for differences in depreciation on an operational asset. The asset cost $300,000 and is depreciated for income tax purposes in the following amounts:

2024 $ 99,000
2025 132,000
2026 45,000
2027 24,000

The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes.

Income amounts before depreciation expense and income taxes for each of the four years were as follows:

2024 2025 2026 2027
Accounting income before taxes and depreciation $ 160,000 $ 180,000 $ 170,000 $ 170,000

Assume the income tax rate for 2024 and 2025 was 30%; however, during 2025, tax legislation was passed to raise the tax rate to 40% beginning in 2026. The 40% rate remained in effect through the years 2026 and 2027. Both the accounting and income tax periods end December 31.

Required:

Prepare the journal entries to record income taxes for the years 2024 through 2027.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services

Authors: By David N. Ricchiute

6th Edition

0324024029, 9780324024029

More Books

Students also viewed these Accounting questions

Question

2. How might epigenetics affect cognitive development?

Answered: 1 week ago

Question

1. Outline the listening process and styles of listening

Answered: 1 week ago