Chapter 19, Problem 3BE

To determine

Deferred tax liability: Some business activities may create dissimilarity in the amount recorded in the books and the taxable income. Those differences create deferred tax liability. For example, Mr.J is a car dealer who sold a car on installment. In actual the sale happened in the current year but the benefits are receivable in the future years. This creates a difference in the books of accounts and the taxable account.

To determine the classification of deferred tax liability in the balance sheet.