O'Malley Corporation prepared the following reconciliation for its first year of operations:
The temporary difference will reverse evenly over the next two years at an enacted tax rate of 40%. The enacted tax rate for 2008 is 35%.
-What amount should be reported in its 2008 income statement as the deferred portion of the provision for income taxes?

Question

O'Malley Corporation prepared the following reconciliation for its first year of operations:
  The temporary difference will reverse evenly over the next two years at an enacted tax rate of 40%. The enacted tax rate for 2008 is 35%.
-What amount should be reported in its 2008 income statement as the deferred portion of the provision for income taxes?

Quizplus · Accepted Answer

$225,000 × .40 = $90,000 debit.

O'Malley Corporation Prepared the Following Reconciliation for Its First Year