Boss Company reported the following results for the year ended December 31, 2019, its first year of operations: 2019 Income (per books before income taxes) $ 1,500,000 Taxable income 2,500,000 The disparity between book income and taxable income is attributable to a temporary difference which will reverse in 2019. What should Boss record as a net deferred tax asset or liability for the year ended December 31, 2019, assuming that the enacted tax rates in effect are 40% in 2019 and 35% in 2020

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08-04-2021
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Boss Company reported the following results for the year ended December 31, 2019, its first year of operations: 2019 Income (per books before income taxes) $ 1,500,000 Taxable income 2,500,000 The disparity between book income and taxable income is attributable to a temporary difference which will reverse in 2019. What should Boss record as a net deferred tax asset or liability for the year ended December 31, 2019, assuming that the enacted tax rates in effect are 40% in 2019 and 35% in 2020

Sagot :

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Abiolataiwo2015idn Abiolataiwo2015idn · Answer 1 · 2021-04-12T22:06:23-04:00

Answer:

$350,000 deferred tax asset.

Explanation:

Calculation to determine What should Boss record as a net deferred tax asset or liability for the year ended December 31, 2019,

Using this formula

December 31, 2019 Net deferred tax asset or liability=Taxable income -2019 Income (per books before income taxes)

Let plug in the formula

December 31, 2019 Net deferred tax asset or liability=(2,500,000 - $ 1,500,000) × 35%

December 31, 2019 Net deferred tax asset or liability= $350,000 deferred tax asset.

Therefore what Boss should record as a net deferred tax asset for the year ended December 31, 2019 is $350,000

Sagot :

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