Calculate the deferred tax liability given the following items incurred in 2020 by Company B. Bonuses are tax deductible only in the year in which they are paid. Accounting Income $86,000 Depreciation Expense $6,500 Tax Depreciation $4,000 Income Not Recognized $4,700 in The Current Period For Tax Purposes 2019 Bonus Paid in $2,630 2020 Accrued Bonuses in $3,500 2020 Tax Rate 28% $350 $372 $425 $394

Calculate the deferred tax liability given the following items incurred in 2020 by Company B. Bonuses are tax deductible only in the year in which they are paid. Accounting Income $86,000 Depreciation Expense $6,500 Tax Depreciation $4,000 Income Not Recognized $4,700 in The Current Period For Tax Purposes 2019 Bonus Paid in $2,630 2020 Accrued Bonuses in $3,500 2020 Tax Rate 28% $350 $372 $425 $394

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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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Calculate the deferred tax liability given the following items incurred in 2020 by Company B.
Bonuses are tax deductible only in the year in which they are paid.
Accounting Income
$86,000
Depreciation Expense
$6,500
Tax Depreciation
$4,000
Income Not Recognized
$4,700
in The Current Period
For Tax Purposes
2019 Bonus Paid in
$2,630
2020
Accrued Bonuses in
$3,500
2020
Tax Rate
28%
$350
$372
$425
$394

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