Thad Corporation has compiled its 2017 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 2017 for income tax expense, deferred tax, and income tax payable.
2. Assume that a stockholder has inquired about the meaning of the numbers recorded and disclosed about deferred tax. Explain why the Deferred Tax liability account exists.

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2017 2016 Deferred tax $180 $200 2017 $500 100 $400 2016 $400 150 $250 Income before tax Tax expense Net income