Preparing journal entries for income tax expense. An electric utility reports the following information about its income taxes for three recent years (amounts in millions):
|
Components of Income Tax Expense |
2008 |
2007 |
2006 |
|
Currently Payable |
$ 46 |
$415 |
$ (96) |
|
Deferred |
344 |
(74) |
368 |
|
Total Income Tax Expense |
$390 |
$341 |
$272 |
a. Give the journal entries to record income tax expense for 2006, 2007, and 2008.
b. Describe the likely reasons for the pattern of taxes currently payable and deferred for each year. Assume that deferred taxes relate primarily to depreciation temporary differences. The effective tax rate was relatively stable for the three years.