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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Balance Sheet Presentation Thiel Company reports the following deferred tax items at the end of 2019:

Chapter 18, Problem 20E, Balance Sheet Presentation Thiel Company reports the following deferred tax items at the end of

Required:

Show how the preceding deferred tax items are reported on Thiel’s December 31, 2019, balance sheet.

To determine

Explain the manner of reporting deferred tax items in the balance sheet of Company T.

Explanation

Deferred tax asset When the Income Tax Expense account is more than the Income Tax Payable account, this difference is known as Deferred Tax Asset.

Deferred tax liability When the Income Tax Expense account is less than the Income Tax Payable account, this difference is known as Deferred Tax Liability.

Prepare balance sheet of Company T as on December 31, 2019:

Company T
Balance sheet (partial)
As on December 31, 2019
AssetsAmount
Current liabilities: 
Deferred tax liability (1)$500
  
Non- Current liabilities: 
Deferred tax liability (2)$4,900
Total liabilities$5,400

Table (1)

Thus, the total liabilities as on December 31, 2019 for Company T are $5,400...

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