Manalo Company leased a facility and received a $600,000 annual rental payment on June 16, 2019. The beginning of the lease was July 1, 2019. Rental income is taxable when received. The income tax rate is 32%. Taft had no other permanent or temporary differences. Taft determined that no valuation is needed. What amount of deferred tax asset should Taft report in its December 31, 2019, financial position? 1, $204,000    2, $96,000 3, $192,000    4, $250,000

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.