Holly inc reports warranty expense when related products

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Holly Inc reports warranty expense when related products are sold. For tax purposes, the warranty costs are deductible as they are paid. At the end of the current year, Holly Inc has a warranty liability of $250,000 and taxable income of $25,000,000. At the end of the previous year, Holly Inc reported a deferred tax asset of $74,000 related to the temporary difference in warranty expense reporting, its only difference. The enacted tax rate is 40%.

Prepare the appropriate journal entry to record the income tax providion for the current year.

Reference no: EM13486121

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