Question

Information for Kent Corp. for the year 2018: Reconciliation of pretax accounting income and taxable income: Pretax accounting income $ 180,400 Permanent differences (15,700 ) 164,700 Temporary difference-depreciation (13,100 ) Taxable income $ 151,600 Cumulative future taxable amounts all from depreciation temporary differences: As of December 31, 2017 $ 13,600 As of December 31, 2018 $ 26,700 The enacted tax rate was 28% for 2017 and thereafter. What should be the balance in Kent's deferred tax liability account as of December 31, 2018?

Answer 1

There should be $3668 as balance in the Kent's deferred tax liability account .

Step-by-step explanation:

A deferred income tax liability is that type of liability which a firm records in its balance sheet because the income which firm has recorded in its book is more than the actual tax which a firm has to pay.

For calculating the deferred tax liability here we will multiply the given tax rate to the cumulative taxable amounts which all are from depreciation temporary differences and take their difference as deferred tax liability.

DEFERRED TAX LIABILITY =

$26,700 X 28% - $13,600 x 28%

= $7476 - $3808

= $ 3668