Lyons company deducts depreciation expense of 150000 for

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Lyons Company deducts depreciation expense of $150,000 for tax purposes in 2010, but the expense is not yet recognized for accounting purposes. In 2011, 2012, and 2013, no depreciation expense will be deducted for tax purposes, but $50,000 of depreciation expense will be reported for accounting purposes in each of these years. Lyons Company has a tax rate of 20% for all of the years in question. There were no deferred taxes at the beginning of 2010.

a. Is the deferred tax account an asset or a liability?

b. How much is in the deferred asset(liability) account at the end of December 31, 2010?

c. What is the journal entry to record income taxes, income taxes payable and deferred taxes on December 31, 2010 if the pre-tax financial statement income for December 31, 2010 is $325,000.

Reference no: EM13591754

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