Prepare Fulhages income tax journal entry at the end

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Question - At the end of 2016, Fulhage Company reported taxable income of $9,000 and pretax financial income of $10,600. The difference is due to depreciation for tax purposes in excess of depreciation for financial reporting purposes. The income tax rate for the current year is 40%, but Congress has enacted tax rates of 35% for 2017 and 30% for 2018 and beyond. Fulhage has calculated the excess of its financial depreciation over its tax depreciation for future years as follows: 2017, $600; 2018, $700; and 2019, $300. Prior to 2016, the company had no deferred tax liability or asset.

Required - Prepare Fulhage's income tax journal entry at the end of 2016.

Reference no: EM132513603

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