At December 31, 2008, Belmont Company had a net deferred tax liability of $375,000. An explanation of
Question:
In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2009, and $120,000 of the temporary difference due to the installment sale will reverse in 2009. The tax rate for all years is 40%.
Instructions
Indicate the manner in which deferred taxes should be presented on Belmont Companys December 31, 2008, balancesheet.
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Resulting Balances in Deferred Taxes $200,000 Temporary Differences 1. Excess of tax depreciation over book depreciation 2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2009. The loss will be deducted on the tax return when paid. (50,000) 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. 225,000 $375,000
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Related Book For
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
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