E connec Ch. 16 Test Question 2 2 0.00 points MC Qu. 71 LO 16-05 The financial r
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E connec Ch. 16 Test Question 2 2 0.00 points MC Qu. 71 LO 16-05 The financial reporting carrying value of Boze Music's only depr.. e financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $147,000 at December 31, 206 T fnancial reporting purposes and MACRS for tax purposes. The asset was scquired earlier in the year. Boze has n other temporary dmerences The enacted tax rate is 26% for 2016 and 36% thereafter. Boze should report the deferred tax effect of this dterence in ts December 3t, 2016, balance sheet as nis was a result of differences between straight line depreciation for O A liability of $52,920 O An asset of $52.920 O A lability of $51,580 O An asset of $51,580 Multiple Choice ?? 020: 71101626 rhe TOSHIBA esc 2 3 4 5 tabExplanation / Answer
The correct option is "An asset of $52,920".
Tax basis of depreciable asset is increased by $147,000
It means tax payable as per tax accounting is higher than the financial accounting.
Deffered Tax Asset is recorded when the amount of tax due according to tax accounting is higher than the according to financial accounting.
Hence, Deffered Tax Assets should reported = $147,000 x 36% = $52,920
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