Problem: The Ambrosia Corporation's lead accountant shows the following info:
On Jan 1, 2012, Ambrosia purchased a bottling machine for $800000
A) Straight-line basis depreciation for 5 years for tax purposes
B) Half year convention for 8 years for financial reporting (See Appendix 11A)
C) Tax-exempt municipal bonds yielded interest of $150000 in 2013
D) Pretax financial income is $2300000 in 2012 and $2400000 in 2013
E) The company recognized an extraordinary gain of $150000 in 2013 (which is fully taxable)
F) Taxable income is expected in future years with an expected tax rate of 35%
Required to do:
1. Prepare the journal entries for income tax expense, income taxes payable, and deferred taxes for 2013.
2. Prepare the deferred income taxes presentation for Dec 31, 2013 balance sheet.