1.What is the deferred tax liability at December 31, 2021?2. What is the deferred tax asset at December 31, 2021?3. What is the current income tax payable at December 31, 2021?4. What is the total income tax expense at December 31, 2021? Rain Inc., in its first year of operations, has the following differences between the carrying valueand tax base of its assets and liabilities at the end of 2021.Carrying Value800,000400,000Tax BaseEquipment (net)Estimated warranty liabilityRain estimates that the warranty liability will be settled in 2022.The difference in equipment will result in taxable amounts as shown below:680,000YearAmount202240,00060,00020,000The company has taxable income of 1,040,000 for 2012. The income tax rate is 30%.20232024

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SWFT Comprehensive Vol 2020

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ISBN:9780357391723

Author:Maloney

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Chapter26: Tax Practice And Ethics

Section: Chapter Questions

Problem 32P

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Question

1.What is the deferred tax liability at December 31, 2021?

2. What is the deferred tax asset at December 31, 2021?

3. What is the current income tax payable at December 31, 2021?

4. What is the total income tax expense at December 31, 2021?

Rain Inc., in its first year of operations, has the following differences between the carrying value
and tax base of its assets and liabilities at the end of 2021.
Carrying Value
800,000
400,000
Tax Base
Equipment (net)
Estimated warranty liability
Rain estimates that the warranty liability will be settled in 2022.
The difference in equipment will result in taxable amounts as shown below:
680,000
Year
Amount
2022
40,000
60,000
20,000
The company has taxable income of 1,040,000 for 2012. The income tax rate is 30%.
2023
2024

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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