Young Corporation reported pretax financial income of $625,000 for the year ended December 31, 2018.

At the beginning of the year, January 1, 2018, Young had a deferred tax liability totaling $65,000 relating to cumulative temporary differences in depreciation. The enacted tax rates are 25% for all years.

Additional information for 2018:

• Depreciation for financial statement purposes totaled $300,000; however, tax depreciation was $210,000.
• EPA pollution fines assessed and paid in 2018 were $21,000
• An estimated litigation loss of $40,000 has been recognized in 2018; management expects to pay this in 2019.

Instructions

1. Determine the taxable income for Young for 2018.

2. Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2018.

3. What is the balance in the deferred tax liability account as of December 31, 2018? What are the total remaining cumulative depreciation differences that comprise this liability?

What is the balance in the deferred tax asset account as of December 31, 2018?