Question

Indigo Corporation began operations in 2017 and reported pretax financial income of $228,000 for the year. Indigo’s tax depreciation exceeded its book depreciation by $38,000. Indigo’s tax rate for 2017 and years thereafter is 30%. In its December 31, 2017, balance sheet, what amount of deferred tax liability should be reported? Deferred tax liability to be reported $

Answer 1

Deferred Tax Liability = $11,400 Credit

Step-by-step explanation:

given data

pretax financial income = $228,000

Indigo’s tax depreciation = $38,000

tax rate = 30 %

solution

we know here that Income Tax Expense is

Income Tax Expense = $228,000 × 30%

Income Tax Expense = $68400 Dr

so as that

Deferred Tax Liability will be here

Deferred Tax Liability = $38000 × 30%

Deferred Tax Liability = $38000 × 0.30

Deferred Tax Liability = $11,400 Credit