In its first year, Firm KZ recognized $427,300 ordinary business income and a $13,590 loss on the sale of an investment asset. In its second year, Firm KZ recognized $500,800 ordinary business income, a $19,300 Section 1231 gain, and a $7,400 Section 1231 loss on two sales of operating assets.* I only need Requirement D to be solved. Required: d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year. In its first year, Firm KZ recognized $427,300 ordinary business income and a $13,590 loss on the sale of an investmentasset. In its second year, Firm KZ recognized $500,800 ordinary business income, a $19,300 Section 1231 gain, and a$7,400 Section 1231 loss on two sales of operating assets.Required:a. Compute KZ's book and taxable income for its first year.b. Using a 21 percent tax rate, compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the lastday of the year.c. Compute KZ's book and taxable income for its second year.d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year.Complete this question by entering your answers in the tabs below.Req A and B Req C and Dc. Compute KZ's book and taxable income for its second year.d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year. (Roundyour intermediate computations and final answer to nearest whole dollar amount.)AmountC.Book incomeC.Tax incomed. Deferred tax asset$512,700$ 500,800

Deferred tax assets are represented on the asset side of the balance sheet. It reduces the tax…

Answered: In its first year, Firm KZ recognized…

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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In its first year, Firm KZ recognized $427,300 ordinary business income and a $13,590 loss on the sale of an investment asset. In its second year, Firm KZ recognized $500,800 ordinary business income, a $19,300 Section 1231 gain, and a $7,400 Section 1231 loss on two sales of operating assets.

* I only need Requirement D to be solved.

Required:

d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year.

In its first year, Firm KZ recognized $427,300 ordinary business income and a $13,590 loss on the sale of an investment
asset. In its second year, Firm KZ recognized $500,800 ordinary business income, a $19,300 Section 1231 gain, and a
$7,400 Section 1231 loss on two sales of operating assets.
Required:
a. Compute KZ's book and taxable income for its first year.
b. Using a 21 percent tax rate, compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last
day of the year.
c. Compute KZ's book and taxable income for its second year.
d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year.
Complete this question by entering your answers in the tabs below.
Req A and B Req C and D
c. Compute KZ's book and taxable income for its second year.
d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year. (Round
your intermediate computations and final answer to nearest whole dollar amount.)
Amount
C.
Book income
C.
Tax income
d. Deferred tax asset
$
512,700
$ 500,800

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