A reconciliation of pretax financial statement income to taxable income is shown below for Fieval Industries for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%. Pretax accounting income (income statement) $ 300,000 Interest revenue on municipal securities (15,000 ) Warranty expense in excess of deductible amount 25,000 Depreciation in excess of financial statement amount (70,000 ) Taxable income (tax return)
A reconciliation of pretax financial statement income to taxable income is shown below for Fieval Industries for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%. |
|
|
|
|
Pretax accounting income (income statement) |
$ |
300,000 |
|
|
Interest revenue on municipal securities |
|
(15,000 |
) |
|
Warranty expense in excess of deductible amount |
|
25,000 |
|
|
|
|
(70,000 |
) |
|
Taxable income (tax return) |
$ |
240,000 |
|
|
What amount(s) should Fieval report related to deferred income taxes in its 2018 balance sheet?
A)
|
||
B) deferred tax liability of $18,000
|
||
C) deferred tax asset of $4,000 and deferred tax liability of $28,000.
|
||
D) deferred tax liability of $24,000. |
Step by step
Solved in 2 steps with 1 images