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deferred Tax (asset)

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#1 rtcpa



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Posted 12 February 2015 - 10:14 AM

Hi guyz

need ur help regarding deferred tax

bellow is example for deferred tax asset


Black Co., organized on January 2, Year 1, had pretax accounting income of $500,000 and taxable income of $800,000 for the year ended December 31, Year 1. The enacted tax rate for all years is 30%. The only temporary difference is accrued product warranty costs which are expenses to be paid as follows: Year 2, $100,000; Year 3, $100,000; Year 4, $100,000


now as per the book to record the tax exp and asset bellow are the journal entry

Journal entry to record the Year 1 taxes:

DR Deferred tax asset $ 90,000
DR Income tax expense—current 240,000 ??
CR Income tax payable $240,000
CR Income tax benefit—deferred 90,000



my question is current income tax exp should be 150,000 only (because this is the expense for the current year under GAAP) ?


plz help me to understand