Lance lawn services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. for tax purposes, the expense is deducted when the cost is incurred. at december 31, 2018, lance has a warranty liability of $2 million and taxable income of $85 million. at december 31, 2017, lance reported a deferred tax asset of $840,000 related to this difference in reporting warranties, its only temporary difference. the enacted tax rate is 40% each year. required: prepare the appropriate journal entry to record lance’s income tax provision for 2018. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field. enter your answers in whole dollars.)

Warranty Liability at December 31, 2018 = $2 million

Therefore,

The balance of deferred tax asset related to warranties:

= $2,000,000 × 40%

= $800,000

The balance of deferred tax asset related to warranties at December 31, 2017 is $840,000.

Therefore, the balance of deferred tax asset should be reduced by ($840,000 - $800,000) = $40,000.

Hence, the journal entry to record Lance's income tax provision for 2018 is as follows:

Income Tax expense A/c                      Dr. $34,040,000      

To Deferred tax asset                                                        $40,000

To Income Tax payable ($85 million × 40%)                    $34,000,000

(To record income tax expense)

answer; enforce the rules;

commercial banking

provide online payment services

provide online banking

asset management firms

invest in people's funds in securities

accept tax return refunds