The beginning prepaid insurance balance for a firm is $80,000. The tax rate is 30% and...

The beginning prepaid insurance balance for a firm is $80,000. The tax rate is 30% and the beginning DTL balance therefore is $24,000. During the year, $60,000 of insurance expense was recognized and $20,000 of insurance was prepaid at year-end. What is the ending DTL balance if the tax rate in future years was changed to 20% in the current year?

20,000

16,000

4,000

8,000

12,000

Solutions

Expert Solution

DTL ending balance should be = Ending Balance of Prepaid Insurance x Tax Rate in the Current year = $20,000 * 20% = $4,000

ekkarill92 answered 1 year ago

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