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A company reports 2021 pretax accounting income of $10 million, but because of a single...

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Accounting

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A company reports 2021 pretax accounting income of $10 million, but because of a single temporary difference, taxable income is only $7 million. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Prepare the appropriate journal entry to record income taxes. BE 16-2 Temporary difference; determine taxable income; determine deferred tax amount L016-2 Kara Fashions uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three years after its purchase, one of Kara's buildings has a book value of $400,000 and a tax basis of $300,000. There were no other temporary differences and no permanent differences. Taxable income was $4 million and Kara's tax rate is 25%. What is the deferred tax liability to be reported in the balance sheet? Assuming that the deferred tax liability balance was $20,000 the previous year, prepare the appropriate journal entry to record income taxes this year. BE 16-3 Temporary difference; determine taxable income; determine deferred tax amount for asset 100% depreciated in year of purchase

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