Question

Mitchell Corporation prepared the following reconciliation for its first year of operations:

Answer 1

Answer:

$140,000

Explanation:

The amount that should be reported in Mitchell Corporation income statement in 2018 as deferred portion of income tax expense is the originating temporary difference of $350,000 multiplied by the  rate of tax by which the temporary difference will reverse itself,which is 40% tax rate not the applicable tax rate in 2015 of 35%.

In other words,the deferred portion of income tax expense is $140,000($350,000*40%).

The appropriate entries would to debit income tax expense and credit deferred tax liability with $140,000