Question

During its first year of operations a company recorded accrued expenses totaling $375,000 for book purposes. For tax purposes, $175,000 of the expenses are deductible during the first year of operations and $200,000 are deductible during the second year of operations. The enacted income tax rate was 21% during the first year of operations and 25% during the second year of operations. The balance sheet at the end of the first year of operations will report a deferred tax:

Answer 1

$50,000

Step-by-step explanation:

Optiins includes "asset of $42,000. liability of $42,000. liability of $50,000. asset of $50,000."

Deferred tax assets = Future deductible amount * Tax rate of future year

Deferred tax assets = $200,000* 25%

Deferred tax assets = $50,000

So, the balance sheet at the end of the first year of operations will report a deferred tax of $50,000