In its 2014 income statement, Tow Inc., reported proceeds from an officer's life insurance policy of $90,000 and depreciation of $250,000. Tow was the owner and beneficiary of the life insurance on its officer. Tow deducted depreciation of $370,000 in its 2014 income tax return when the tax rate was 30%. Data related to the reversal of the excess tax deduction for depreciation follow: Year 2015 2016 2017 2018 Reversal of Excess Tax Deduction for Depreciation $50,000 40,000 20,000 10,000 Enacted Tax Rates 35% 35 25 25 Tow has no other temporary differences. Required: In its December 31, 2014, balance sheet, what amount should Tow report as a deferred tax liability?
In its 2014 income statement, Tow Inc., reported proceeds from an officer's life insurance policy of $90,000 and depreciation of $250,000. Tow was the owner and beneficiary of the life insurance on its officer. Tow deducted depreciation of $370,000 in its 2014 income tax return when the tax rate was 30%. Data related to the reversal of the excess tax deduction for depreciation follow: Year 2015 2016 2017 2018 Reversal of Excess Tax Deduction for Depreciation $50,000 40,000 20,000 10,000 Enacted Tax Rates 35% 35 25 25 Tow has no other temporary differences. Required: In its December 31, 2014, balance sheet, what amount should Tow report as a deferred tax liability?
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 16DQ
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Transcribed Image Text:In its 2014 income statement, Tow Inc., reported proceeds from an officer's life
insurance policy of $90,000 and depreciation of $250,000. Tow was the owner and
beneficiary of the life insurance on its officer. Tow deducted depreciation of $370,000
in its 2014 income tax return when the tax rate was 30%. Data related to the reversal
of the excess tax deduction for depreciation follow:
Year
2015
2016
2017
2018
Reversal of Excess Tax Deduction for
Depreciation
$50,000
40,000
20,000
10,000
Enacted Tax Rates
35%
35
25
25
Tow has no other temporary differences.
Required:
In its December 31, 2014, balance sheet, what amount should Tow report as a
deferred tax liability?
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