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...!!
ekkarill92 answered 7 months agoRelated Solutions
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