At the beginning of 2018; Blossom, Inc. had a deferred tax asset of $19000 and a

Q: At the beginning of 2018; Blossom, Inc. had a deferred tax asset of $19000 and a

B. A debit of $84200 The following is required to adjust Blossom, Inc.’s deferred tax asset to its correct balance at December 31, 2018: = ($258,000 * 0.40) – $19,000 = $84,200

ID: 2530731 • Letter: A

Question

At the beginning of 2018; Blossom, Inc. had a deferred tax asset of $19000 and a deferred tax liability of $29000. Pre-tax accounting income for 2018 was $1480000 and the enacted tax rate is 40%. The following items are included in Blossom’s pre-tax income:

Which of the following is required to adjust Blossom, Inc.’s deferred tax asset to its correct balance at December 31, 2018?

Interest income from municipal bonds $118000 Accrued warranty costs, estimated to be paid in 2019 $258000 Operating loss carryforward $188000 Installment sales profit, will be taxed in 2019 $128000 Prepaid rent expense, will be used in 2019 $59000

Explanation / Answer

B. A debit of $84200

The following is required to adjust Blossom, Inc.’s deferred tax asset to its correct balance at December 31, 2018:

= ($258,000 * 0.40) – $19,000

= $84,200

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At the beginning of 2018; Blossom, Inc. had a deferred tax asset of $19000 and a

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