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Walt Disney Company reported pretax financial income of %5,300,000 for 2018. Disney's income tax rate is 21% for all years. The relevant book/ tax differences
Walt Disney Company reported pretax financial income of %5,300,000 for 2018. Disney's income tax rate is 21% for all years. The relevant book/ tax differences are: On 1/1/17, Disney purchased new equipment for $8 million, which has a 4-year useful life. For book, Disney records annual depreciation of 2 million. The tax method yields annual depreciation of 3 million, 2.5 million, 2 million and 0.5 million for 2017, 2018, 2019, and 2020, respectively. A $210,000 DTL was reported at 12/31/17. During 2018, Disney was sued by a customer for breach of contract. At 12/31/18 Disney accrued $2 million for its estimate of the probable loss from expected settlement. No amounts have yet been paid. Litigation losses are deductible when paid for tax purposes Prepare the necessary journal entry to record income tax expense and to adjust the related balance sheet accounts as of 12/31/18
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