Assuming that an enterprise realizes total pre-tax profits of 10 million yuan per year, and in 20X8 expects 1 million in warranty expenses for product sales

Because the warranty expenses are not actually paid when they are extracted, and the relevant amount should be added back to the profit when calculating the taxable income, so the actual tax payable - enterprise income tax is (1000+100)*25%, which is included in the account of "income tax expense". The amount is included in the "Income Tax Expense -- Current Income Tax" account.

Borrow: Income tax expense - current income tax (1000+100)*25%

Credit: Taxes payable - EIT

And the $1,000,000 warranty expense creates a deductible temporary difference (which is deductible in the future), forming a deferred tax liability. deductible in the future), forming a deferred income tax asset of 100*25%

Borrow: Deferred Income Tax Asset

Loan: Income Tax Expense--Deferred Income Tax 100*25%

On the income statement of the current period, the amount of income tax expense is (1,000+100)*25%- 100*25%

Net Income = Total Profit - Income Tax Expense = 1000 - (1000+100)*25% + 100*25%

In 2009, the same calculation of income tax expense is done. Only at this time, the deferred tax assets recognized in 2008 to be reversed:

Borrow: Income Tax Expense - Deferred Income Tax 100*25%

Loan: Deferred Income Tax Assets

That is, in the basis of profit adjusted by the taxable income * 25% of the current income tax expense calculation basis, plus 100*25% for FY2009 income tax expense. That is, the net profit for 2009 is $100*25% million less than normal.