1. Excess of tax depreciation over book depreciation $ 208,600 2. Accrual, for book purposes, of estimated loss contingency frompending lawsuit that is expected to be settled in 2020. The losswill be deducted on the tax return when paid. ( 46,900)3. Accrual method used for book purposes and installment methodused for tax purposes for an isolated installment sale of an investment. 224,500 $ 386,200 In analyzing the temporary differences, you find that $ 30,700 of the depreciation temporary difference will reverse in 2020, and $ 115,300 of the temporary difference due to the installment sale will reverse in 2020. The tax rate for all years is 20%.Indicate the manner in which deferred taxes should be presented on Sage Company’s December 31, 2019, balance sheet.

Deferred Tax asset/liability = temporary diff x Future tax rate future tax rate is 20% as per the…

Answered: Excess of tax depreciation over book…

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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1.	Excess of tax depreciation over book depreciation	$ 208,600
2.	Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2020. The loss will be deducted on the tax return when paid.	( 46,900	)
3.	Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment.	224,500
		$ 386,200

In analyzing the temporary differences, you find that $ 30,700 of the depreciation temporary difference will reverse in 2020, and $ 115,300 of the temporary difference due to the installment sale will reverse in 2020. The tax rate for all years is 20%.

Indicate the manner in which deferred taxes should be presented on Sage Company’s December 31, 2019, balance sheet.

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