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question 2 kara fashions uses the straight line depreciation forfinancial statement 4278807

Question

2. Kara Fashions uses the straight-line depreciation forfinancial statement reporting and MACRS for income tax reporting.Three years after its purchase, one of Kara’s buildings has a bookvalue of $440,000 and a tax basis of $310,000. There were no othertemporary differences and no permanent differences. Taxable incomewas $5 million and Kara’s tax rate is 40%. What is the deferred taxliability to be reported in the balance sheet? Assume that thedeferred tax liability balance was $50,000 in the previousyear.

Prepare the appropriate journal entry to record income taxesthis year, please show how you came to the answer.

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