On December 31,2009,Loran Corporation reported a deferred tax liability totaling $12,000,resulting from depreciation timing differences pertaining to a depreciable asset purchased during 2009.Loran uses straight-line depreciation over four years for GAAP (book)purposes; for tax purposes,the depreciation deduction is 40% of cost during 2009,30% of cost during 2010,20% of cost during 2011,and 10% of cost during 2012.During 2010,Loran expensed $75,000 of warranty costs that will be deducted for tax purposes in future years.Loran also accrued revenue totaling $150,000 which is taxable in 2011.Loran's GAAP (book)income before taxes during 2010 totaled $397,700.The marginal income tax rate is 40% for all years.
Required:
(1)What is the taxable income?
(2)Prepare the journal entry to record income tax expense for the year ended December 31,2010.

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The Answer of On December 31,2009,Loran Corporation reported a deferred tax liability totaling $12,000,resulting from depreciation timing differences pertaining to a depreciable asset purchased during 2009.Loran uses straight-line depreciation over four years for GAAP (book)purposes; for tax purposes,the depreciation deduction is 40% of cost during 2009,30% of cost during 2010,20% of cost during 2011,and 10% of cost during 2012.During 2010,Loran expensed $75,000 of warranty costs that will be deducted for tax purposes in future years.Loran also accrued revenue totaling $150,000 which is taxable in 2011.Loran's GAAP (book)income before taxes during 2010 totaled $397,700.The marginal income tax rate is 40% for all years.
Required:
(1)What is the taxable income?
(2)Prepare the journal entry to record income tax expense for the year ended December 31,2010.

On December 31,2009,Loran Corporation Reported a Deferred Tax Liability Totaling