Reference no: EM131171092
Pole Co. at the end of 2010, its first year of operations, prepareda reconciliation between pretax financial income and taxable income as follows:
Pretax financial income $420,000
Extra depreciation taken for tax purposes -1,050,000
Estimated expenses deductible for taxes when paid 840,000
Taxable income $210,000
Use of the depreciable assets will result in taxable amounts of$350,000 in each of the next three years.
The estimated litigation expenses of $840,000 will be deductible in2013 when settlement is expected.
Instructions
(a) Prepare a schedule of future taxable and deductible amounts.
(b) Prepare the journal entry to record income tax expense,deferred taxes, and income taxes payable for 2010, assuming a tax rate of 40% for all years.
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