Holmes Corporation has a cumulative temporary difference related to depreciation of $ 580,000 at December 31, 2025. This difference will reverse as follows: 2026, $42,000; 2027, $244,000; and 2028, $294, 000. Enacted tax rates are 17% for 2026 and 2027, and 20% for 2028. Compute the amount Holmes should report as a deferred tax liability at December 31, 2025.

Holmes Corporation has a cumulative temporary difference related to depreciation of $ 580,000 at December 31, 2025. This difference will reverse as follows: 2026, $42,000; 2027, $244,000; and 2028, $294, 000. Enacted tax rates are 17% for 2026 and 2027, and 20% for 2028. Compute the amount Holmes should report as a deferred tax liability at December 31, 2025.

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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