Question Content AreaOn January 1, 2016, Bedrock Company began recognizing revenues from all sales under the accrual method for financial reporting purposes and under the installment sales method for income tax purposes. Bedrock reported the following gross margin on sales for 2016 and 2017: AccrualInstallmentYearMethodSales Method2016$1,200,000$1,000,00020171,800,0001,400,000The enacted tax rate for both 2016 and 2017 was 30%. Assuming there are no other temporary differences, 2017 what is the amount of deferred tax liability that Bedrock should report on its December 31, 2017 balance sheet?$120,000$450,000$60,000$180,000

Deferred Tax Liability: It is the liability that is owed but are not due to be paid until a future…

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Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.6P

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On January 1, 2016, Bedrock Company began recognizing revenues from all sales under the accrual method for financial reporting purposes and under the installment sales method for income tax purposes. Bedrock reported the following gross margin on sales for 2016 and 2017:

Accrual Installment

Year Method Sales Method

2016 $1,200,000 $1,000,000

2017 1,800,000 1,400,000

The enacted tax rate for both 2016 and 2017 was 30%. Assuming there are no other temporary differences, 2017 what is the amount of deferred tax liability that Bedrock should report on its December 31, 2017 balance sheet?

$120,000

$450,000

$60,000

$180,000

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