At December 31, 2019, Belmont Company had a net deferred tax liability of $375,000. An explanation of
Question:
At December 31, 2019, Belmont Company had a net deferred tax liability of $375,000. An explanation of the items that compose this balance is as follows.
In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2020, and $120,000 of the temporary difference due to the installment sale will reverse in 2020. The tax rate for all years is 20%.
Instructions
Indicate the manner in which deferred taxes should be presented on Belmont Company?s December 31, 2019, balance sheet.
Transcribed Image Text:
Resulting Balances in Deferred Taxes 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 2020. The loss will be deducted on the tax return when paid. 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. $200,000 (50,000) 225,000 $375,000
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Deferred tax asset 50000 Deferred tax liability 425000 Net noncurre...View the full answer
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Related Book For
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
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