Question

Question 4 A company has a temporary difference due to depreciation. For fiscal year 2012, its Income Tax Expense is $15,000 and its Taxable Income is $100,000. The statutory tax rate is 35% What is the correct journal entry for recording 2012 Income Tax Expense and Income Tax Payable

Answer 1

Total income tax expense during the year is $15,000.

Statutory tax = 35% rate ($10,000*35% = $3,500).

Remaining part $11,500 ($15,000 - $3,500) would be the deferred tax liability.

Date Accounts titles & Explanation Debit Credit

Income tax expense $15,000

Deferred tax liabilities $11,500

Income tax payable $3,500

(To record income tax obligations)