Shane Company Uses an Accelerated Depreciation Method for Income Tax

question 60

Multiple Choice

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, 2016, Shane has a deferred tax liability balance related to depreciation temporary differences of $80,000. In 2017, depreciation for income tax purposes was $360,000, while depreciation for financial reporting purposes was $300,000. If the income tax rate is 30%, no other temporary or permanent differences exist, and taxable income is $400,000,which of the following would be included in the entry to record income tax expense on December 31, 2017?

• A) Debit to Income Tax Expense for $138,000
• B) Credit to Income Taxes Payable for $138,000
• C) Debit to Deferred Tax Asset for $120,000
• D) Credit to Deferred Tax Liability for $120,000

---

Definitions:

Operations Management

A field of management that deals with designing, controlling, and redesigning business operations in the production of goods or services.

Ethical Challenges

Moral dilemmas and issues that arise in the practice of business and professional activities, requiring deliberation and decision-making.

Social Challenges

Issues that affect individuals or communities, related to inequality, health, education, and access to resources, requiring collective action for resolution.

Operations-Related Tasks

Activities and duties associated with managing and improving the processes that produce goods or deliver services in an organization.