Question
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset is purchased in 2018 at a cost of $120,000 and is depreciated fully for income tax purposes in 2018. The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Pretax accounting income amounts for each of the four years were as follows:
Pretax accounting:
2018 was $90,000
2019 was $80,000
2020 was $70,000
2021 was $70,000
1. Prepare the year-end journal entries to record income taxes for 2018. The answer is below. Could you show me how to get this answer?
Income tax expense 27,000
Deferred tax liability 27,000
2. Prepare the year-end journal entries to record income taxes for 2019. The answer is below. Could you show me how to get this answer?
Income tax expense 30,000
Deferred tax liability 3,000
Income tax payable 33,000
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