Answer:
The income subject to tax is 470,000
Income tax expense 105,000 debit
Income tax payable 98,700 credit
Income tax liability 6,300 credit
<u>DISCLAMER:</u>
We aren't given any tax-rate thus we calculate based on the 2020 tax for corporation which is 21%
Explanation:
The permanent difference will be ignored as they are permanent will not produce tax liability or tax assets in the future.
favorable temporary difference 200,000
unfavorable temporary difference (170,000)
net favorable temporary difference 30,000
In the current period, the company will pay for a tax-base 30,000 less
but, in the future this difference will settle this, I will create a tax-liability
30,000 x 21% = 6,300
income subject to income tax:
book income 700,000
permanent difference (200,000)
accounting taxable income 500,000
temporary difference <u> (30,000)</u>
Taxable Income 470,000
Income tax expense: 470,000 x 21% = 98,700
income tax expense: 500,000 x 21% = 105,000
