Question

In: Accounting

At December 31, 2016, Belmont Company had a net deferred tax liability of $375,000. An explanation...

At December 31, 2016, Belmont Company had a net deferred tax
liability of $375,000. An explanation of the items that compose this balance is as follows.
Resulting Balances

Temporary Differences
1. Excess of tax depreciation over book depreciation
in Deferred Taxes
$200,000

2. Accrual, for book purposes, of estimated loss contingency from pending
lawsuit that is expected to be settled in 2017. The loss will be deducted on

the tax return when paid.
3. Accrual method used for book purposes and installment method used for
tax purposes for an isolated installment sale of an investment.
(50,000)
225,000
$375,000

In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2017, and
$120,000 of the temporary difference due to the installment sale will reverse in 2017. The tax rate for all years is 40%.
Instructions
Indicate the manner in which deferred taxes should be presented on Belmont Company’s December 31, 2016, balance sheet

Solutions

Expert Solution

IF YOU HAVE ANY DOUBTS COMMENT BELOW I WILL BE TTHERE TO HELP YOU..ALL THE BEST..

AS FOR GIVEN DATA..

At December 31, 2016, Belmont Company had a net deferred tax
liability of $375,000. An explanation of the items that compose this balance is as follows.
Resulting Balances

Temporary Differences
1. Excess of tax depreciation over book depreciation
in Deferred Taxes
$200,000

2. Accrual, for book purposes, of estimated loss contingency from pending
lawsuit that is expected to be settled in 2017. The loss will be deducted on

the tax return when paid.
3. Accrual method used for book purposes and installment method used for
tax purposes for an isolated installment sale of an investment.
(50,000)
225,000
$375,000

In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2017, and
$120,000 of the temporary difference due to the installment sale will reverse in 2017. The tax rate for all years is 40%.
Instructions
Indicate the manner in which deferred taxes should be presented on Belmont Company’s December 31, 2016, balance sheet

EXPLANATION ::-

I HOPE YOU UNDERSTAND..

PLS RATE THUMBS UP..ITS HELPS ME ALOT..

THANK YOU...!!


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