Dunn, 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 $3,000,000 will be collected in the following years when the enacted tax rates are: Enacted Collection of Tax Rates Income 2024 $ 300,000 25% 2025 600,000 20% 2026 900,000 20% 2027 1,200,000 15% The installment income is Dunn's only temporary difference. What amount should be reported as a deferred income tax liability in Dunn's December 31, 2024 balance sheet? A) $480,000 B) $555,000 OC) $675,000 D) $750,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Dunn, 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 $3,000,000 will be collected in the following years
when the enacted tax rates are:
Enacted
Collection of
Tax Rates
Income
2024
$ 300,000
25%
2025
600,000
20%
2026
900,000
20%
2027
1,200,000
15%
The installment income is Dunn's only temporary difference. What amount should be
reported as a deferred income tax liability in Dunn's December 31, 2024 balance
sheet?
A) $480,000
B) $555,000
OC) $675,000
D) $750,000
Transcribed Image Text:Dunn, 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 $3,000,000 will be collected in the following years when the enacted tax rates are: Enacted Collection of Tax Rates Income 2024 $ 300,000 25% 2025 600,000 20% 2026 900,000 20% 2027 1,200,000 15% The installment income is Dunn's only temporary difference. What amount should be reported as a deferred income tax liability in Dunn's December 31, 2024 balance sheet? A) $480,000 B) $555,000 OC) $675,000 D) $750,000
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