Blossom, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Installment income of $3500000 will be collected in the following years when the enacted tax rates are: Collection of IncomeEnacted Tax Rates2020$40000025%202170000020%202299000020%2023141000015%The installment income is Blossom's only temporary difference. What amount should be included in the deferred income tax liability in Blossom's December 31, 2020 balance sheet?$669500$875000$549500$775000

Solution: deferred income tax liability in December 31, 2020 balance sheet = Future taxable amount *…

Answered: Blossom, Inc. uses the accrual method…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Blossom, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Installment income of $3500000 will be collected in the following years when the enacted tax rates are:

	Collection of Income	Enacted Tax Rates
2020	$400000	25%
2021	700000	20%
2022	990000	20%
2023	1410000	15%

The installment income is Blossom's only temporary difference. What amount should be included in the deferred income tax liability in Blossom's December 31, 2020 balance sheet?

$669500

$875000

$549500

$775000

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