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ABC Company began operations in 2020 and reported pretax financial income of $225,000 for the...

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Accounting

  1. ABC Company began operations in 2020 and reported pretax financial income of $225,000 for the year. ABCs tax depreciation exceeded its book depreciation by $40,000. ABCs tax rate for 2020 and years thereafter is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported?

  1. Using the information from Problem #5 above, assume this is the only difference between ABCs pretax financial income and taxable income. Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable, and show how the deferred tax liability will be classified on the December 31, 2020, balance sheet.

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