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Accounting

FShannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $720,000 and with an expected useful life of four years and no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $820,000, which includes interest revenue of $22,000 from municipal bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 40%. Prepare the journal entry to record income taxes.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M950677

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