Reference no: EM132825572

You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company's income tax position based on the following:

Pretax accounting income was $62 million and taxable income was $10 million for the year ended December 31, 2021.

The difference was due to three items:

1. Tax depreciation exceeds book depreciation by $50 million in 2021 for the business complex acquired that year. This amount is scheduled to be $80 million in 2022 and to reverse as ($80 million) and ($50 million) in 2023 and 2024, respectively.
2. Insurance of $10 million was paid in 2021 for 2022 coverage.
3. A $8 million loss contingency was accrued in 2021, to be paid in 2023.
4. No temporary differences existed at the beginning of 2021.
5. The tax rate is 25%.

Required:

Problem 1: Identify the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry.