Question

I really just need the journal entries and how income tax payable and expense are calculated for the entries each year. Thank you

Ayres Services acquired an asset for $116 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2018 $ 420 29.0 (34.0) $ 415 ($ in millions) 2019 2020 $ 440 $ 455 29.0 29.0 (42.0) (24.0) $ 427 $ 460 2021 $ 490 29.0 (16.0) $ 503 Required: Determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Beginning of 2018 End of 2018 End of 2019 End of 2020 End of 2021 Temporary Difference Deferred Tax Liability

Answer 1

journal entries towards the expense and deferred tax liability:
Date	Acc Titles	Debit $	Credit $
31-Dec-18	Tax expense	168			420*0.4
	Deferred Tax Liability		2
	Tax payable		166		415*0.4
	(being tax expense and deferred tax liability created)
31-Dec-19	Tax expense	176			440*0.4
	Deferred Tax Liability		5.2
	Tax payable		170.8		427*0.4
	(being tax expense and deferred tax liability created)
31-Dec-20	Tax expense	182			455*0.4
	Deferred Tax Liability	2
	Tax payable		184		460*0.4
	(being tax expense and deferred tax liability adjustment made)
31-Dec-21	Tax expense	196			490*0.4
	Deferred Tax Liability	5.2
	Tax payable		201.2		503*0.4
	(being tax expense and deferred tax liability adjustment made)