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Calculate deferred taxes and income tax expense

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Reference no: EM132535638

Question - ABC Company deducts insurance expense of €84,000 for tax purposes in 2018, but the expense is not yet recognized for accounting purposes. In 2019, 2020, and 2021, no insurance expense will be deducted for tax purposes, but €28,000 of insurance expense will be reported for IFRS accounting purposes in each of these years. ABC Company has a tax rate of 40% and income taxes payable of €72,000 at the end of 2018. There were no deferred taxes at the beginning of 2018.

Instruction -

a) Calculate deferred taxes and income tax expense at the end of 2018.

b) Present relevant journal entries for 2018 for taxes.

c) Assuming that income taxes payable for 2019 is $96,000; calculate the income tax expense for 2019?

Reference no: EM132535638

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