Reference no: EM132685871

At the end of 2015, Wasicsko Company has €180,000 of cumulative temporary differences that will result in reporting future taxable amounts as follows:

2016 € 70,000

2017 50,000

2018 40,000

2019 20,000

€180,000

Tax rates enacted as of the beginning of 2014 are:

2014 and 2015 40%

2016 and 2017 30%

2018 and later 25%

Wasicsko's taxable income for 2015 is €340,000. Taxable income is expected in all future years.

Instructions

Problem (a) Prepare the journal entry for Wasicsko to record income taxes payable, deferred income taxes, and income tax expense for 2015, assuming that there were no deferred taxes at the end of 2014.

Problem (b) Prepare the journal entry for Wasicsko to record income taxes payable, deferred income taxes, and income tax expense for 2015, assuming that there was a balance of €22,000 in a Deferred Tax Liability account at the end of 2014.