Temporary Differences 1. Excess of tax depreciation over book depreciation 2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2017. The loss will be deducted on the tax return when paid. 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. Resulting Balances in Deferred Taxes $208,600 (46,900) 224,500 $386,200 In analyzing the temporary differences, you find that $30,700 of the depreciation temporary difference will reverse in 2017, and $115,300 of the temporary difference due to the installment sale will reverse in 2017. The tax rate for all years is 40%. Indicate the manner which deferred taxes should be presented on Carla Company's December 31, 2016, balance sheet.
Temporary Differences 1. Excess of tax depreciation over book depreciation 2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2017. The loss will be deducted on the tax return when paid. 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. Resulting Balances in Deferred Taxes $208,600 (46,900) 224,500 $386,200 In analyzing the temporary differences, you find that $30,700 of the depreciation temporary difference will reverse in 2017, and $115,300 of the temporary difference due to the installment sale will reverse in 2017. The tax rate for all years is 40%. Indicate the manner which deferred taxes should be presented on Carla Company's December 31, 2016, balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:At December 31, 2016, Carla Company had a net deferred tax liability of $386,200. An explanation of the items that compose this balance is as follows.
Resulting Balances
in Deferred Taxes
$208,600
Temporary Differences
1. Excess of tax depreciation over book depreciation
2. Accrual, for book purposes, of estimated loss contingency from pending
lawsuit that is expected to be settled in 2017. The loss will be deducted on
the tax return when paid.
3.
Accrual method used for book purposes and installment method used for tax
purposes for an isolated installment sale of an investment.
In analyzing the temporary differences, you find that $30,700 of the depreciation temporary difference will reverse in 2017, and $115,300 of the temporary difference due to the installment sale will
reverse in 2017. The tax rate for all years is 40%.
Indicate the manner in which deferred taxes should be presented on Carla Company's December 31, 2016, balance sheet.
Carla Company's
Balance Sheet
December 31, 2016
Non-current Liabilities.
(46,900)
224,500
$386,200
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