The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $158,000 at December 31, 2021. This was a result of differences between straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 25% for 2021 and 37% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2021, balance sheet as: O An asset of $56,680. O A liability of $56,680. O A liability of $58,460. O An asset of $58,460.

The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $158,000 at December 31, 2021. This was a result of differences between straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 25% for 2021 and 37% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2021, balance sheet as: O An asset of $56,680. O A liability of $56,680. O A liability of $58,460. O An asset of $58,460.

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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