The books of Angry Men Company for the year ended December 31, 2023, showed pretax GAAP (book) income of $500,000. In computing the taxable income for federal income tax purposes, the following timing differences were considered: Depreciation deducted for tax purposes in excess of depreciation recorded on the books: $35,000 Income from sale reported for tax purposes in excess of income recognized on the books: $15,000 What should Angry Men record as its current federal income tax liability at December 31, 2023, assuming a corporate income tax rate of 30 percent?

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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.