1. A reconciliation of Sauder Company's pretax accounting income with its taxable income for 2014,...
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Accounting
1. A reconciliation of Sauder Company's pretax accounting income with its taxable income for 2014, its first year of operations, is as follows: Pretax accounting income $8,000,000 less Excess tax depreciation (240,000) =Taxable income $7,760,000
The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 40% in 2014, 35% in 2015 and 2016, and 30% in 2017.
Required:
(a) Compute the total deferred tax liability to be reported on Sauder's balance sheet at December 31, 2014.
(b) Create the journal entry required at December 31, 2014 to record tax expense.
This is the solution I just want the information of how the professor got the numbers
1.(a)
2014
2015
2016
2017
Total
(240,000)
80,000
80,000
80,000
0
Tax Rate
0.40
0.35
0.35
0.30
DTL
28,000
28,000
24,000
80,000
7,760,000
Tax Payable
3,104,000
(b)
Journal Entry
Dr.
Cr.
Tax Expense
3,184,000
Taxes Payable
3,104,000
Deferred Tax Liability
80,000
Answer & Explanation
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