At the End of 2015, Its First Year of Operations

question 23

Essay

at the end of 2015, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Use of the depreciable assets will result in taxable amounts of $350,000 in each of the next three years. The estimated litigation expenses of $890,000 will be deductible in 2018 when settlement is expected.
Instructions
(a) Prepare a schedule of future taxable and deductible amounts.
(b) Prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 2015, assuming a tax rate of 40% for all years.

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