Question - Pharoah Corporation began operations in 2017 and reported pretax financial income of $218,000 for the year. Pharoah's tax depreciation exceeded its book depreciation by $40,000. Pharoah's tax rate for 2017 and years thereafter is 30%. Assume this is the only difference between Pharoah's pretax financial income and taxable income.
Required -
Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable.
Show how the deferred tax liability will be classified on the December 31, 2017, balance sheet.