At year end, Jackson, Inc. reported the carrying value of its equipment at $2 million. The...

At year end, Jackson, Inc. reported the carrying value of its equipment at $2 million. The tax base of the equipment was $1.2 million. Assuming a tax rate of 40%, Jackson should report a deferred tax liability of:

Group of answer choices

A) $800,000.

B) $320,000.

C) $480,000.

Solutions

Expert Solution

Actual tax =carrying value of equipment*tax rate=2,000,000*40%=800,000

Tax paid as per the income tax=1,200,000*40%=480,000

The deferred tax liability=800,000-480,000=320,000

Option B is correct

jeff jeffy answered 2 years ago

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