Use the following information for questions 73 and 74.
Kraft Company made the following journal entry in late 2014 for rent on property it leases to Danford Corporation. The payment represents rent for the years 2015 and 2016, the period covered by the lease. Kraft Company is a cash basis taxpayer. Kraft has income tax payable of $184,000 at the end of 2014, and its tax rate is 35%.
-Assuming the income taxes payable at the end of 2015 is $204,000, what amount of income tax expense would Kraft Company record for 2015?

Question

Use the following information for questions 73 and 74.
Kraft Company made the following journal entry in late 2014 for rent on property it leases to Danford Corporation.  The payment represents rent for the years 2015 and 2016, the period covered by the lease. Kraft Company is a cash basis taxpayer. Kraft has income tax payable of $184,000 at the end of 2014, and its tax rate is 35%.
-Assuming the income taxes payable at the end of 2015 is $204,000, what amount of income tax expense would Kraft Company record for 2015?

Quizplus · Accepted Answer

The income tax expense is calculated by adjusting the income taxes payable with any changes in deferred tax liabilities or assets. If the payable is $204,000 and the expense is higher, it suggests an increase in deferred tax liabilities or a decrease in deferred tax assets, leading to an expense of $225,000.

Use the Following Information for Questions 73 and 74