Question

For financial statement reporting, Lexington Corporation recognizes royalty income in the period earned. However, royalties are taxed when collected. At December 31, 2013, unearned royalties of $400,000 were included in Lexington’s balance sheet. All of these royalties had been collected in 2013. During 2014, royalties of $600,000 were collected. Unearned royalties in Lexington’s December 31, 2014, balance sheet amounted to $350,000. Assume that the income tax rate was 40%.

Required:
What amount should be reported as the deferred portion of the provision for income taxes in Lexington’s income statement for the year ended December 31, 2014?



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  • CreatedSeptember 10, 2014
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