Chapter 16 ACG 4111 Exam Study Guide
deferred tax liability - ANSWER-If tax laws allow a company to postpone paying taxes on activities
reported in the current period's income statement, the company must report a deferred tax liability
because the company anticipates those activities will lead t...
d.Credit to tax for $30 - ANSWER✔✔-a.Debit to tax expense for $170
how can deferred tax assets and liabilities be computed from temporary book-tax differences -
ANSWER✔✔-calculated by multiplying the temporary book-tax difference by the applicable tax rate
Hardy Welders Inc. had purchased a machine at the beginning of year 1 for $2,000,000. The machine has
a useful life of 10 years and a book value of $1,800,000 at the beginning of year 2. Hardy depreciates the
machine on a straight line basis for financial reporting purposes but fully depreciates it on the date of
purchase for tax purposes. Hardy pays taxes at a rate of 25%. Hardy's year 2 balance sheet should
include a deferred tax liability of:
a.$1,600,000
b.$400,000
c.$0
d.Insufficient information to answer - ANSWER✔✔-b 400000
Shortly before the end of 2021, Colter Company makes an installment sale that generates $400 of
before-tax income. Colter recognizes income for accounting purposes when the sale is made, but will
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