Exercise 19-20 (Part Level Submission)

The differences between the book basis and tax basis of the assets and liabilities of Crane Corporation at the end of 2016 are presented below.

		Book Basis		Tax Basis
Accounts receivable		$52,200		$0
Litigation liability		31,200		0

It is estimated that the litigation liability will be settled in 2017. The difference in accounts receivable will result in taxable amounts of $31,600 in 2017 and $20,600 in 2018. The company has taxable income of $378,000 in 2016 and is expected to have taxable income in each of the following 2 years. Its enacted tax rate is 34% for all years. This is the companys first year of operations. The operating cycle of the business is 2 years.

(b) Indicate how deferred income taxes will be reported on the balance sheet at the end of 2016. Crane Corporation Balance Sheet $ Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT