Requirement 1)
$ in Million | * | Tax Rate % | = | Tax $ | Recorded as | |
Pretax accounting Income | 200.00 | |||||
Permanent Difference | - | |||||
Income Subject to taxation | 200.00 | * | 25% | = | 50.00 | Income Tax Expense |
Temporary Difference: | ||||||
Depreciation | (30.00) | * | 25% | = | (7.50) | Deferred Tax Liability |
Prepaid Insurance | (50.00) | * | 25% | = | (12.50) | Deferred Tax Liability |
Liability-Contingent Loss | 25.00 | * | 25% | = | 6.25 | Deferred Tax Asset |
Income Taxable in current year | 145.00 | * | 25% | = | 36.25 | Income Tax Payable |
.
Requirement 1 GJ)
Journal Entry: | ||
Debit | Credit | |
Income Tax Expense | 50.00 | |
Deferred Tax Asset | 6.25 | |
Deferred Tax Liability | 20.00 | |
Income Tax Payable | 36.25 |
.
Requirement 2)
2021 Net Income | |
Pretax Income | 200.00 |
Less: Income Tax 25% | 50.00 |
Net Income | 150.00 |
.
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