Question
Voting corp. manufacturers ballots that cause the voter to unknowingly vote for the part that bought the ballots. It uses the straight-line method of reporting
Voting corp. manufacturers ballots that cause the voter to unknowingly vote for the part that bought the ballots. It uses the straight-line method of reporting depreciation in financial reporting to its shareholders and an accelerated depreciation method on its tax return. This difference in depreciation methods gives rise to the following differences between its taxable income:
2020 2021 2022 2033
Taxable income $180,000 $200,000 $320,000 $340,000
Financial Reporting Income $210,000 $210,000 $210,000 $310,000
The tax rate in effect for 2020 and 2021 is 40%.
Assume that in 2021 Congress passed and the President signed on June 1, 2021, a bill that would reduce the tax rate to 30% on January 1, 2022. Prepare the journal entry to record the tax liability, tax expense, and deferred tax liability or expense (if any) for each year.
Indicate whether any deferred tax asset or liability will be current or non-current.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started