On December 31,2009,Loran Corporation Reported a Deferred Tax Liability Totaling

question 47

Essay

On December 31,2009,Loran Corporation reported a deferred tax liability totaling $12,000,resulting from depreciation timing differences pertaining to a depreciable asset purchased during 2009.Loran uses straight-line depreciation over four years for GAAP (book)purposes; for tax purposes,the depreciation deduction is 40% of cost during 2009,30% of cost during 2010,20% of cost during 2011,and 10% of cost during 2012.During 2010,Loran expensed $80,000of warranty costs that will be deducted for tax purposes in future years.Loran also accrued revenue totaling $135,000 which is taxable in 2011.Loran's GAAP (book)income before taxes during 2010 totaled $380,000The marginal income tax rate is 40% for all years.
Required:
(1)What is the taxable income?
(2)Prepare the journal entry to record income tax expense for the year ended December 31,2010. 

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Definitions:

Exposure Therapies

Psychological treatments that involve the exposure to feared stimuli or situations in order to reduce anxiety and desensitize individuals to the source of their fear.

Compulsive Behavior

Behavior patterns that are repeated to reduce anxiety or distress but are not connected in a realistic way with what they are designed to neutralize.

Cognitive-Behavioral Theorists

Experts in a psychological field that melds cognitive and behavioral approaches to understand and treat psychological disorders.

Compulsions

Actions or thoughts that a person compulsively repeats due to obsessions or strict guidelines.