Deferred tax liability

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Deferred Tax Liability

Teancum Inc. began operating on January 1, 2008. At the end of the first year of operations, Teancum reported $600,000 income before income taxes on its income statement but only $510,000 taxable income on its tax return. Analysis of the $90,000 difference revealed that
$50,000 was a permanent difference and $40,000 was a temporary tax liability difference related to a current asset. The enacted tax rate for 2008 and future years is 35%.

1. Prepare the journal entries to record income taxes for 2008.

2. Assume that at the end of 2009, the accumulated temporary tax liability difference related to future years is $80,000. Prepare the journal entry to record any adjustment to deferred tax liabilities at the end of 2009.

Reference no: EM13553499

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