Problem - Pole Co. at the end of 2015, 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 890,000
Taxable income $ 260,000
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 $890,000 will be deductible in 2018 when settlement is expected.
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 2015, assuming a tax rate of 40% for all year?