The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $158,000 at December 31, 2021. This was a result of differences between straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 25% for 2021 and 37% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2021, balance sheet as: O An asset of $56,680. O A liability of $56,680. O A liability of $58,460. O An asset of $58,460.
The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $158,000 at December 31, 2021. This was a result of differences between straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 25% for 2021 and 37% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2021, balance sheet as: O An asset of $56,680. O A liability of $56,680. O A liability of $58,460. O An asset of $58,460.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 4MC: Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the...
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