At December 31, 2016, the Blue Agave Company had a current deferred tax asset of $60,000, arising from cash for magazine subscriptions received and taxed in 2016 but that will be recognized as income for accounting purposes in
2017; a noncurrent deferred tax liability of $160,000 arising from an excess of MACRS tax depreciation over straight-line accounting depreciation of plant assets; and a long-term deferred tax asset of $80,000, arising from contingency expenses for accounting purposes that will be tax deductible when paid estimated to be in 2018). The
2017 pretax financial income and taxable income for Blue Agave are as follows: Required:
Prepare the income tax journal entry for the Blue Agave Company at the end of 2017.

Question

At December 31, 2016, the Blue Agave Company had a current deferred tax asset of $60,000, arising from cash for magazine subscriptions received and taxed in 2016 but that will be recognized as income for accounting purposes in
2017; a noncurrent deferred tax liability of $160,000 arising from an excess of MACRS tax depreciation over straight-line accounting depreciation of plant assets; and a long-term deferred tax asset of $80,000, arising from contingency expenses for accounting purposes that will be tax deductible when paid estimated to be in 2018). The
2017 pretax financial income and taxable income for Blue Agave are as follows:  Required:
Prepare the income tax journal entry for the Blue Agave Company at the end of 2017.

Quizplus · Accepted Answer

The Answer of At December 31, 2016, the Blue Agave Company had a current deferred tax asset of $60,000, arising from cash for magazine subscriptions received and taxed in 2016 but that will be recognized as income for accounting purposes in
2017; a noncurrent deferred tax liability of $160,000 arising from an excess of MACRS tax depreciation over straight-line accounting depreciation of plant assets; and a long-term deferred tax asset of $80,000, arising from contingency expenses for accounting purposes that will be tax deductible when paid estimated to be in 2018). The
2017 pretax financial income and taxable income for Blue Agave are as follows:  Required:
Prepare the income tax journal entry for the Blue Agave Company at the end of 2017.

At December 31, 2016, the Blue Agave Company Had a Current