Cross Company reported the following results for the year ended December 31, 2014, its first year of operations: Income (per books before income taxes) Taxable income 2014 $ 1,500,000 2,400,000 The disparity between book income and taxable income is attributable to a temporary difference which will reverse in 2015. What should Cross record as a net deferred tax asset or liability for the year ended December 31, 2014, assuming that the enacted tax rates in effect are 40% in 2014 and 35% in 2015? O $360,000 deferred tax liability O $315,000 deferred tax asset O $360,000 deferred tax asset O $315,000 deferred tax liability
Cross Company reported the following results for the year ended December 31, 2014, its first year of operations: Income (per books before income taxes) Taxable income 2014 $ 1,500,000 2,400,000 The disparity between book income and taxable income is attributable to a temporary difference which will reverse in 2015. What should Cross record as a net deferred tax asset or liability for the year ended December 31, 2014, assuming that the enacted tax rates in effect are 40% in 2014 and 35% in 2015? O $360,000 deferred tax liability O $315,000 deferred tax asset O $360,000 deferred tax asset O $315,000 deferred tax liability
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cross Company reported the following results for
the year ended December 31, 2014, its first year of
operations:
Income (per books before income taxes)
Taxable income
2014
$ 1,500,000
2,400,000
The disparity between book income and taxable
income is attributable to a temporary difference
which will reverse in 2015. What should Cross
record as a net deferred tax asset or liability for the
year ended December 31, 2014, assuming that the
enacted tax rates in effect are 40% in 2014 and
35% in 2015?
O $360,000 deferred tax liability
O $315,000 deferred tax asset
O $360,000 deferred tax asset
O $315,000 deferred tax liability
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