The financial reporting carrying value of Boze Music\'s only depreciable asset e

Question

The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $158,000 at December 31, 2016. This was a result of differences between straight-line depreciation for financial reporting purposes and MACRS for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 25% for 2016 and 32% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2016, balance sheet as:

An asset of $50,560.

A liability of $48,780.

An asset of $48,780.

A liability of $50,560.

Explanation / Answer

A liability of $50,560

the difference is $158,000

Tax rate $32%

hence deferred tax liabilty will be $158,000 @32% = $50,560

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.