Deferred Tax (Appendix) Thad Corporation has compiled its 2010 financial statements. Included in the Long Term Liabilities category of the balance sheet are the following amounts:

Included in the income statement are the following amounts related to income taxes:

Required
1. Determine the effect on the accounting equation in 2010 for income tax expense, deferred tax, and income tax payable.
2. Assume that a stockholder has inquired about the meaning of the numbers recorded. Explain why the Deferred Tax liability accountexists.

2010 2009 Deferred tax $180 $200 2010 2009 Income before tax Tax expense $500 100 $400 $400 150 $250 Net income