Information for Kent Corp. for the year 2013: Reconciliation of pretax accounting income and...
Question:
Information for Kent Corp. for the year 2013:
| Reconciliation of pretax accounting income and taxable income: | |
| Pretax accounting income | $178,500 |
| Permanent differences | (13,800) |
| 164,700 | |
| Temporary difference-depreciation | (12,700) |
| Taxable income | $152,000 |
Cumulative future taxable amounts all from depreciation temporary differences:
| As of December 31, 2012 | $13,200 |
| As of December 31, 2013 | $25,900 |
The enacted tax rate was 23% for 2012 and thereafter.
What should be the balance in Kent's deferred tax liability account as of December 31, 2013?
a) $4,356.
b) $5,957.
c) $25,900.
d) None of the above is correct.
Deferred tax liability:
When a person must pay taxes for a transaction that has not been completed in a given year, the tax obligation must be brought forward to the year it was completed, thus, leading to deferred tax liability.
Answer and Explanation: 1
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View this answerThe correct option is b
The calculation for the balance in deferred tax liability as of December 31, 2013, is as follows:
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Income Tax Liability | Definition, Calculation & Deductions
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Learn what income tax liability is. Find out what taxable and adjusted gross income are, discover how to calculate tax liability, and examine common deductions.
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