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    Future Taxable Amounts and Deferred Taxes

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    I have a problem on future taxable amounts and deferred taxes and I am totally lost. The information is attached. I don't know where to begin the calculations.

    I need some help with this problem. The following information is available for a corporation for 2006.
    1. Exess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2007-2010.
    2. Deferral, for book purposes of $20,000 of rent received in advance. The rent will be earned in 2007.
    3. Pretax financial income, $300,000
    4 Tax rate for all years is 40%
    No beginning Deferred Taxes

    (a) Compute taxable income for 2006
    (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2006.
    (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007, assuming taxable income of $325,000.

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    1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2007-2010.
    2. Deferral, for book purposes of $20,000 of rent received in advance. The rent will be earned in 2007.
    3. Pretax financial income, $300,000
    4 Tax rate for all years is 40%
    No beginning Deferred Taxes

    (a) Compute taxable income for 2006

    (a) Pretax financial income for 2006 $300,000
    Excess of tax depreciation over book depreciation (40,000)
    Rent received in ...

    Solution Summary

    The solution explains how to determine the future taxable amounts and deferred taxes and the related journal entries

    $2.19

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