Accounting Mystery Tip

Assuming a 40% tax rate, if you have depreciation expense for accounting purposes of 20K and tax purposes of 30K, and of that, accounting income is 100K and taxable income is 90K,  you will then need to realize:

​A Dr. of tax expense of 40 (40% of 100) a DTL Cr. of 4 (40% of 10 in depreciation), and Cr. 36 for tax payables (40% of 90K).