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You are the new accounting manager at the Barry Transport Company. Your CFO h s asked you to provide input on the company's income tax
You are the new accounting manager at the Barry Transport Company. Your CFO hs asked you to provide input on the company's income tax position based on the following:
Pretax accounting income was $ million and taxable income was $ million for the year ended December
The difference was due to three items:
a Tax depreciation exceeds book depreciation by $ million in for the business complex acquired that year. This amount is scheduled to be $ million in and to reverse as $ million and $ million in and respectively.
b Insurance of $ million was paid in for coverage:
c A $ million loss contingency was accrued in to be paid in
No temporary differences existed at the beginning of
The tax rate is
Required:
Determine the amounts necessary to record income taxes for and prepare the appropriate journal entry.
Assume the enacted federal income tax law specifies that the tax rate will change from to in When scheduling the reversal of the depreciation difference, you were uncertain as to how to deal with the fact that the difference will continue to originate in before reversing the next two years. Upon consulting Pricewaterhouse Coopers' Comperio database, you found:
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