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Question#03: The following information is available for ABC Corporation for 2017 (its first year of operations). Excess of tax depreciation over book depreciation, Tk.60,000. This
Question#03:
The following information is available for ABC Corporation for 2017 (its first year of operations).
- Excess of tax depreciation over book depreciation, Tk.60,000. This Tk.60,000 difference will reverse totally in 2018.
- Deferral, for book purposes, of Tk. 30,000 of rent received in advance. The rent will be recognized equally over the years 2018- 2020.
- Taxable income Tk.120,000.
- Tax rate for all years, 30%.
Required:
- Compute pretax financial income for 2017.
- Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017.
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2018, assuming taxable income of Tk.475,000.
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