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The following information is available for Eliza Corporation for $2023$:

$1.$ Depreciation reported on the tax return exceeded depreciation reported on the income statement by $$201,000.$ The differences will reverse as follows:

$2024134,000$

$202533,500$

$202633,500$

$2.$ Annual interest received on municipal bonds was $$13,000$ in $2023$ and $$15,000$ in $2024.$

$3.$ Rent collected in advance on September $1,2023,$ totaled $$117,000$ for a $3-$year period. Rent was recognized monthly, starting on September $1,2023$ for book purposes.

$4.$ During $2023$ and $2024,$ Eliza paid $$20,000($each year$)$ for a life insurance policy on its executives, with Eliza as the beneficiary. In $2024,$ Eliza received $$250,000$ due to the untimely passing of its CFO.

$5.$ The tax rates are $20\%$ for $2023$ and $2024,$ and $30\%$ for $2025$ and beyond.

$6.$ A contingent loss due to litigation was accrued in $2023$ for $$250,000.$ The company expects to pay the loss in $2025.$

$7.$ Pretax financial income for the year ended December $31,2023$ was $$6,150,000,$ and $$6,550,000$ for the year ended December $31,2024.$

$8.$ The company has a $$5,800$ credit balance in the Valuation Allowance and a beginning balance of $$17,000$ in the DTA account due to a temporary difference of $$85,000$ caused by a deferred revenues for GAAP purposes. The difference was realized for tax purposes in $2023.$

$9.$ Of the ending balance of the DTA account, the company believes that it is "more likely than not" that $14\%$ will not be realized.

$10.$ On $1/1/2024,$ a surprise tax cut was implemented, causing the $2024$ tax rate to increase by $2\%,$ and the $2025$ and beyond tax rates to decrease by $2\%.$ What is the journal entry to record the adjustment to the DTA$/$DTL balances, and the valuation allowance.

Instructions

Assuming no other differences between book and taxable incomes existed, except for those mentioned above, prepare the $2024$ tax rate change journal entry, and the year end income tax journal entries to record Income Tax Expense, Deferred Tax Asset$/$Liability$,$ Income Taxes Payable and Valuation Allowance for $2024($separate the valuation allowance journal entry from the income tax expense journal entry$).$The following information is available for Eliza Corporation for $2023$:

$1.$ Depreciation reported on the tax return exceeded depreciation reported on the income statement by $$201,000.$ The differences will reverse as follows:

$2024134,000$

$202533,500$

$202633,500$

$2.$ Annual interest received on municipal bonds was $$13,000$ in $2023$ and $$15,000$ in $2024.$

$3.$ Rent collected in advance on September $1,2023,$ totaled $$117,000$ for a $3-$year period. Rent was recognized monthly, starting on September $1,2023$ for book purposes.

$4.$ During $2023$ and $2024,$ Eliza paid $$20,000($each year$)$ for a life insurance policy on its executives, with Eliza as the beneficiary. In $2024,$ Eliza received $$250,000$ due to the untimely passing of its CFO.

$5.$ The tax rates are $20\%$ for $2023$ and $2024,$ and $30\%$ for $2025$ and beyond.

$6.$ A contingent loss due to litigation was accrued in $2023$ for $$250,000.$ The company expects to pay the loss in $2025.$

$7.$ Pretax financial income for the year ended December $31,2023$ was $$6,150,000,$ and $$6,550,000$ for the year ended December $31,2024.$

$8.$ The company has a $$5,800$ credit balance in the Valuation Allowance and a beginning balance of $$17,000$ in the DTA account due to a temporary difference of $$85,000$ caused by a deferred revenues for GAAP purposes. The difference was realized for tax purposes in $2023.$

$9.$ Of the ending balance of the DTA account, the company believes that it is "more likely than not" that $14\%$ will not be realized.

$10.$ On $1/1/2024,$ a surprise tax cut was implemented, causing the $2024$ tax rate to increase by $2\%,$ and the $2025$ and beyond tax rates to decrease by $2\%.$ What is the journal entry to record the adjustment to the DTA$/$DTL balances, and the valuation allowance.

Instructions

Assuming no other differences between book and taxable incomes existed, except for those mentioned above, prepare the $2024$ tax rate change journal entry, and the year end income tax journal entries to record Income Tax Expense, Deferred Tax Asset$/$Liability$,$ Income Taxes Payable and Valuation Allowance for $2024($separate the valuation allowance journal entry from the income tax expense journal entry$).$

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