Shane Company uses an accelerated depreciation method for income tax purposes and the straight-line depreciation method for financial reporting purposes. As of December 31, 2012, Shane has a deferred tax liability balance related to depreciation temporary differences of $80,000. In 2013, depreciation for income tax purposes was $360,000, while depreciation for financial reporting purposes was $300,000. The income tax rate is 30%, no other temporary or permanent differences exist, and taxable income is $400,000. Prepare the entry to record income tax expense on December 31, 2013.
Your tutorial shows a model of income taxes and puts the facts into the model. The JE is shown and a T account for deferred tax liability. Instructional notes are left for you.