Problem
The accounting income of Cullumber Corporation and its taxable income for the years 2023 to 2026 are as follows:
|
Year
|
Accounting Income
|
Taxable Income
|
Tax Rate
|
|
2023
|
$466,000
|
$300,000
|
25%
|
|
2024
|
429,000
|
297,000
|
30%
|
|
2025
|
396,000
|
307,000
|
30%
|
|
2026
|
468,000
|
649,000
|
30%
|
The change in the tax rate from 25% to 30% was not enacted until early in 2024.
Accounting income for each year includes an expense of $41,000 that will never be deductible for tax purposes. The remainder of the difference between accounting income and taxable income in each period is due to one reversing difference for the depreciation of property, plant, and equipment. No deferred taxes existed at the beginning of 2023.
Calculate the current and deferred tax expense or benefit for each of the four years. Also calculate the balance of the deferred tax balance sheet account at the end of each fiscal year from 2023 to 2026.