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Prepare the partial income statement

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Reference no: EM132861169

Question - Problem Exercise - Excess minimum corporate income tax (MCIT) credits - As of December 31, 2021, DiCaprio Inc. had a regular corporate income tax (RCIT) liability of $350,000 and minimum corporate income tax (MCIT) liability of $500,000. Under the current income tax law, the excess MCIT over the RCIT can be carried over as credit against RCIT in the next three subsequent years. DiCaprio expects to pay the RCIT in the next three years.

In 2022, the financial performance of DiCaprio was affected by financial crises. It had a RCIT liability of $260,000 and MCIT liability of $420,000. DiCaprio expects to pay MCIT in 2023 and 2024, while it expects to pay RCIT of $100,000 in 2025.

In 2023, DiCaprio had an RCIT liability of $280,000 and MCIT liability of $250,000. It expects to pay RCIT in the future.

The RCIT rate is 28% while the MCIT rate is 2%. There are were no temporary and permanent differences. Income taxes for a given taxable year is payable in April of the subsequent year.

Required - Solve the following:

1. Prepare the journal entries to record the income taxes for 2021, 2022 and 2023.

2. Prepare the partial income statement beginning with "Income before income taxes" for the year ended December 31, 2021, 2022 and 2023.

Reference no: EM132861169

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