The following facts relate to Duncan Corporation 1

Deferred ta
The following facts relate to Duncan Corporation.1. Deferred tax liability, January 1, 2008,
$60,000.2. Deferred tax asset, January 1, 2008, $20,000.3. Taxable income for 2008,
$105,000.4. Cumulative temporary difference at December 31, 2008, giving rise to future
taxable amounts, $230,000.5. Cumulative temporary difference at December 31, 2008, giving
rise to future deductible amounts, $95,000.6. Tax rate for all years, 40%. No permanent
differences exist.7. The company is expected to operate profitably in the future.Instructions(a)
Compute the amount of pretax financial income for 2008.(b) Prepare the journal entry to record
income tax expense, deferred income taxes, and income taxes payable for 2008.(c) Prepare the
income tax expense section of the income statement for 2008, beginning with the line “Income
before income taxes.”(d) Compute the effective tax rate for 2008.View Solution:
The following facts relate to Duncan Corporation 1 Deferred ta
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