Chapter 16, Problem 16.9P

1.

To determine

Deferred Tax

Deferred tax is an amount i.e. computed on the basis of tax liability on the income as per income statement and the income as per tax return, that difference is known as deferred tax. Deferred tax amount is deferred to the next financial year.

Deferred tax asset

When the Income Tax Expense account is more than the Income Tax Payable account, this difference is known as Deferred Tax Asset.

Deferred tax liability

When the Income Tax Expense account is less than the Income Tax Payable account, this difference is known as Deferred Tax Liability.

To determine: The total deferred tax asset and deferred tax liability amounts at December 31, 2016.

2.

To determine

The change in deferred tax asset and deferred tax liability accounts at December 31, 2016.

3.

To determine

The amount of income tax payable for the year ended at December 31, 2016.

4.

To determine

To prepare: The journal entry to record income taxes for 2016

5.

To determine

To classify: The deferred tax amount in the classified balance sheet of 2016.