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Nott Co. at the end of 2007, its first year of ope...




Nott Co. at the end of 2007, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 420,000 Extra depreciation taken for tax purposes (1,050,000) Estimated expenses deductible for taxes when paid 840,000 Taxable income $ 210,000 Use of the depreciable assets will result in taxable amounts of $350,000 in each of the next three years. The estimated litigation expenses of $840,000 will be deductible in 2010 when settlement is expected. Instructions (a) Prepare a schedule of future taxable and deductible amounts. (b) Prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 2007, assuming a tax rate of 40% for all years


Paper#5168 | Written in 18-Jul-2015

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