Question

CCC Corporation has one temporary difference at the end of the of 2014. The difference will reverse and cause deductible amounts of $10,000 in 2015 and $20,000 in 2016. CCC 's pretax financial income (FI) for 2014 is $300,000 and CCC's pretax financial income (FI) for 2015 is $200,000. The tax rate is 30% for all years.

A. Prepare the CCC's journal entry to accounting for income tax for 2014

B. Prepare the CCC'c journal entry to accounting for income tax for 2015

Answer 1

Solution A:

Journal Entries - CCC Corporation
Year	Particulars	Debit	Credit
2014	Income Tax expense Dr	$90,000.00
	Deferred tax assets Dr ($30,000*30%)	$9,000.00
	To Income tax payable ($330,000*30%)		$99,000.00
	(To record income tax expense and deferred tax assets for 2014)

Solution b:

Journal Entries - CCC Corporation
Year	Particulars	Debit	Credit
2015	Income Tax expense Dr	$60,000.00
	To Deferred tax assets ($10,000*30%)		$3,000.00
	To Income tax payable ($190,000*30%)		$57,000.00
	(To record income tax expense and reversal deferred tax assets for 2014)