Depreciation60000 ID: 137719
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Exercise 16-18The information that follows pertains to Esther Food Products:a.At December 31, 2013, temporary differences were associated with the following future taxable (deductible) amounts: Depreciation$60,000 future taxable amountPrepaid expenses17,000 future taxable amountWarranty expenses(12,000) future deductible amountb.No temporary differences existed at the beginning of 2013. ©Dr. Chula KingAll Rights Reservedc.Pretax accounting income was $80,000 and taxable income was $15,000 for the year ended December 31, 2013.d.The tax rate is 40%. Exercise 16-18 (continued)Determine the amounts necessary to record income taxes for 2013 and prepare the appropriate journal entry.Pretax accounting income (given)$80,000Temporary differences: Depreciation(60,000) DTLPrepaid expenses(17,000) DTLWarranty expenses12,000 DTATaxable income (given)$15,000 Tax ex p ense 000 ©Dr. Chula KingAll Rights Reserved p(pg) , Deferred tax asset (40% x 12,000)4,800Deferred tax liability (40% x 77,000)30,800Taxes payable (40% x 15,000)6,000