Question

A company makes the following journal entry for 2020:

Dr. Income Tax Expense                    xxxx

Dr. Deferred Tax Asset                      77,000

            Cr. Deferred Tax Liability                     27,000

            Cr. Income Tax Payable                                 275,000

On the income statement, the deferred portion of income tax expense for 2020 appears as: _______________. Very important: If the amount of the deferred portion is subtracted from the current portion to obtain income tax expense, put a minus sign in front of the amount; if the amount of the deferred portion is added to the current portion, then leave the amount as is.

Answer 1

Deferred portion of income tax expense for 2020 [Indicates with minus sign]

-50,000

Calculation

Date	General Journal	Debit	Credit
Dec 31, 2020	Income tax Expenses [balancing figure] (275000+27000-77000)	225,000
	Deferred tax asset	77,000
	Deferred tax liability		27,000
	Income taxes payable		275,000
	(To record Income tax expense.)

Income tax expenses:-
Current tax	275,000
Deffered tax (225000-275000)	(50,000)
Income tax expenses	225,000