Exercise 198 2017 2018 2019 799000 944000 951000 29100 3930

Exercise 19-8

2017

2018

2019

$799,000

$944,000

$951,000

(29,100

)

(39,300

)

(10,200

)

19,500

9,800

8,100

$789,400

$914,500

$948,900

Account Titles and Explanation

Debit

Credit

2017

2018

2019

Exercise 19-8 Crane Company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 Pretax financial income $799,000 $944,000 $951,000 Excess depreciation expense on tax return (29,100 ) (39,300 ) (10,200 ) Excess warranty expense in financial income 19,500 9,800 8,100 Taxable income $789,400 $914,500 $948,900 The income tax rate for all years is 40%.

Solution

        Year

                          Account title and explanation

   Debit

    Credit

2017

Income tax expense(799,000*40%)

$319,600

Deferred tax asset(19,500*40%)

$7,800

                   Income tax payable(789,400*40%)

$315,760

                   deferred tax liability(29,100*40%)

$11,640

2018

Income tax expense(944,000*40%)

$377,600

Deferred tax asset(9,800*40%)

$3,920

                 Income tax payable(914,500*40%)

$365,800

                 deferred tax liability(39,300*40%)

$15,720

2019

income tax expense (951,000*40%)

$380,400

Deferred tax asset (8100*40%)

$3,240

                Income tax payable(948,900*40%)

$379,560

                deferred tax liability(10,200*40%)

$4,080

Year	Account title and explanation	Debit	Credit
2017	Income tax expense(799,000*40%)	$319,600
	Deferred tax asset(19,500*40%)	$7,800
	Income tax payable(789,400*40%)		$315,760
	deferred tax liability(29,100*40%)		$11,640
2018	Income tax expense(944,000*40%)	$377,600
	Deferred tax asset(9,800*40%)	$3,920
	Income tax payable(914,500*40%)		$365,800
	deferred tax liability(39,300*40%)		$15,720
2019	income tax expense (951,000*40%)	$380,400
	Deferred tax asset (8100*40%)	$3,240
	Income tax payable(948,900*40%)		$379,560
	deferred tax liability(10,200*40%)		$4,080