Sunland, Inc. had pre-tax accounting income of $2100000 and a tax rate of 40% in

Question

Sunland, Inc. had pre-tax accounting income of $2100000 and a tax rate of 40% in 2018, its first year of operations. During 2018 the company had the following transactions:
Received rent from Jane, Co. for 2019 $90000 Municipal bond income $114000 Depreciation for tax purposes in excess of book depreciation $54000 Installment sales profit to be taxed in 2019 $156000
At the end of 2018, which of the following deferred tax accounts and balances exist at December 31, 2018?
      Account       Balance

Deferred tax asset $57600 Deferred tax asset $36000 Deferred tax liability $57600 Deferred tax liability $36000

Explanation / Answer

Sunland Inc, Rent from Jane Inc Muncipal Bond Income cosidered tax-exempt Tax depreication in excess of book depreciation Installment sales profit to be taxed in 2019 Accounting Income $ 90000 114000 0 156000 Taxable Income 0 -54000 0 Deffered Tax Liability Permanent difference Deffered Tax Liability Debatable issue. It's deffered tax Liability as per US GAAP =90000*40% 0 =54000*40% Though we are not considering it here 36000 21600 Net Impact is Deffered Tax Liability =36000+21600 Answer is deffered Tax Liability 57600

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