Question

Button Company has the following two temporary differences between its income tax expense and income taxes payable.

 

 

2014

 

2015

 

2016

Pretax financial income

 

$844,500

 

 

$911,500

 

 

$950,700

 

Excess depreciation expense on tax return

 

(36,200

)

 

(42,300

)

 

(27,000

)

Excess warranty expense in financial income

 

28,900

 

 

12,430

 

 

8,420

 

Taxable income

 

$837,200

 

 

$881,630

 

 

$932,120

 

                   

 

The income tax rate for all years is 30%.

2014

2015

2016

$844,500

$911,500

$950,700

(36,200

)

(42,300

)

(27,000

)

28,900

12,430

8,420

$837,200

$881,630

$932,120

Account Titles and Explanation

Debit

Credit

2014

2015

2016

Button Company

Balance Sheet

2016

Button Company

Income Statement (Partial)

Year ended December 31, 2016



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