Blue Corporation is an IFRS reporter. Blue's taxable income is $700,000 and the company estimates a deferred tax asset of $45,000 due to a book-tax difference in warranty liabilities. Management has assessed that it is probable that it will not realize 30% of the deferred tax asset. Assuming a 40% tax rate, how should the realizable deferred tax asset be recorded? Group of answer choices Income Tax Expense 13,500 Deferred Tax Asset 31,500 Valuation Allowance– for Deferred Tax 45,000 Deferred Tax Asset 13,500 Valuation Allowance for Deferred Tax 13,500 Income Tax Expense 235,000 Deferred Tax Asset 45,000 Income Tax Payable 280,000 Income Tax Expense 248,500 Deferred Tax Asset 31,500 Income Tax Payable 280,000
Blue Corporation is an IFRS reporter. Blue's taxable income is $700,000 and the company estimates a deferred tax asset of $45,000 due to a book-tax difference in warranty liabilities. Management has assessed that it is probable that it will not realize 30% of the deferred tax asset. Assuming a 40% tax rate, how should the realizable deferred tax asset be recorded? Group of answer choices Income Tax Expense 13,500 Deferred Tax Asset 31,500 Valuation Allowance– for Deferred Tax 45,000 Deferred Tax Asset 13,500 Valuation Allowance for Deferred Tax 13,500 Income Tax Expense 235,000 Deferred Tax Asset 45,000 Income Tax Payable 280,000 Income Tax Expense 248,500 Deferred Tax Asset 31,500 Income Tax Payable 280,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Blue Corporation is an IFRS reporter. Blue's taxable income is $700,000 and the company estimates a deferred tax asset of $45,000 due to a book-tax difference in warranty liabilities. Management has assessed that it is probable that it will not realize 30% of the deferred tax asset. Assuming a 40% tax rate, how should the realizable deferred tax asset be recorded?
Group of answer choices
| Income Tax Expense | 13,500 | |
| Deferred Tax Asset | 31,500 | |
| Valuation Allowance– for Deferred Tax | | 45,000 |
| Deferred Tax Asset | 13,500 | |
| Valuation Allowance for Deferred Tax | | 13,500 |
| Income Tax Expense | 235,000 | |
| Deferred Tax Asset | 45,000 | |
| Income Tax Payable | | 280,000 |
| Income Tax Expense | 248,500 | |
| Deferred Tax Asset | 31,500 | |
| Income Tax Payable | | 280,000 |
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