Question

Alpha began operations in 2015. It reported $500 in revenues. It reported $200 depreciation expense on its 2015 tax return; however, it reported $50 depreciation expense on its 2015 income statement. The difference in depreciation (Alpha's only book-tax difference) is a temporary book-tax difference that will reverse over time. Assuming a constant tax rate of 30%. What will be the balance in the DTL account in Alpha's 2015 balance sheet?

Answer 1

$45

Step-by-step explanation:

Calculation to determine What will be the balance in the DTL account in Alpha's 2015 balance sheet

Using this formula

Deferral Tax Liabiltiy balance =(2015 Reported depreciation expense on tax return-2015 Reported depreciation expense on income statement)*Tax rate

Let plug in the formula

Deferral Tax Liabiltiy balance=($200-$50)*30%

Deferral Tax Liabiltiy balance=$150*30%

Deferral Tax Liabiltiy balance=$45

Therefore What will be the balance in the DTL account in Alpha's 2015 balance sheet is $45