Deferred income taxes
Seenath Ltd., at the end of 2020, its first year of operations, prepared a reconciliation between pre-tax accounting income and taxable income as follows: $\begin{array}{lr}
\text { Pre-tax account ing income } & \$ 300,000 \
\text { Excess CCA claimed for tax purposes } & (600,000) \
\text { Estimated expenses deduct ible when paid } & \$ 500,000 \
\text { Taxable income } & \$ 200,000
\end{array}$ Use of the depreciable assets will result in taxable amounts of $ 200,000 in each of the next three years. The estimated expenses of $ 500,000 will be deductible in 2023 when settlement is expected to be made.
The enacted tax rate is 25% and is not expected to change.
Instructions
a) Prepare a schedule of the deferred taxable and deductible amounts.
b) Prepare the required adjusting journal entries to record income taxes for 2020.

Question

Deferred income taxes
Seenath Ltd., at the end of 2020, its first year of operations, prepared a reconciliation between pre-tax accounting income and taxable income as follows: $\begin{array}{lr}
\text { Pre-tax account ing income } & \$ 300,000 \
\text { Excess CCA claimed for tax purposes } & (600,000) \
\text { Estimated expenses deduct ible when paid } & \$ 500,000 \
\text { Taxable income } & \$ 200,000
\end{array}$ Use of the depreciable assets will result in taxable amounts of $ 200,000 in each of the next three years. The estimated expenses of $ 500,000 will be deductible in 2023 when settlement is expected to be made.
The enacted tax rate is 25% and is not expected to change.
Instructions 
a) Prepare a schedule of the deferred taxable and deductible amounts.
b) Prepare the required adjusting journal entries to record income taxes for 2020.

Quizplus · Accepted Answer

The Answer of Deferred income taxes
Seenath Ltd., at the end of 2020, its first year of operations, prepared a reconciliation between pre-tax accounting income and taxable income as follows: $\begin{array}{lr}
\text { Pre-tax account ing income } & \$ 300,000 \
\text { Excess CCA claimed for tax purposes } & (600,000) \
\text { Estimated expenses deduct ible when paid } & \$ 500,000 \
\text { Taxable income } & \$ 200,000
\end{array}$ Use of the depreciable assets will result in taxable amounts of $ 200,000 in each of the next three years. The estimated expenses of $ 500,000 will be deductible in 2023 when settlement is expected to be made.
The enacted tax rate is 25% and is not expected to change.
Instructions 
a) Prepare a schedule of the deferred taxable and deductible amounts.
b) Prepare the required adjusting journal entries to record income taxes for 2020.

Deferred Income Taxes Seenath Ltd Use of the Depreciable Assets Will Result in Taxable Amounts

Deferred Income Taxes
Seenath Ltd Use of the Depreciable Assets Will Result in Taxable Amounts