On June 30, year 1, Ank Corp. prepaid a $19,000 premium on an annual insurance policy. The
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Question:
on an annual insurance policy. The premium payment was a tax
deductible expense in Ank?s year 1 cash basis tax return. The
accrual basis income statement will report a $9,500 insurance
expense in year 1 and year 2.
Ank?s income tax rate is 30% in year 1 and 25% thereafter.
In Ank?s December 31, year 1 balance sheet, what amount related
to the insurance should be reported as a deferred income tax
liability?
$5,700
$4,750
$2,850
$2,375
Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
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