Question
Asked Mar 10, 2020
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Indigo Corporation began operations in 2020 and reported pretax financial income of $234,000 for the year. Indigo’s tax depreciation exceeded its book depreciation by $33,000. Indigo’s tax rate for 2020 and years thereafter is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported?

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Expert Answer

Step 1

Deferred tax liability arises when the book depreciation is more than tax depreciation in the current year as this would enhance the income ...

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