Weatherly Company reported the following results for the year ended December 31, 2019, its first year of operations: Income (per books before income taxes) $3,300,000 Taxable income 4,450,000 The disparity between book income and taxable income is attributable to a temporary difference, which will reverse in 2017. What should Weatherly record as a net deferred tax asset or liability for the year ended December 31, 2019, assuming that the enacted tax rates in effect are 35% in 2019 and 30% in 2020

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Business

Ayden Poole

21 August, 13:00

Weatherly Company reported the following results for the year ended December 31, 2019, its first year of operations: Income (per books before income taxes) $3,300,000 Taxable income 4,450,000 The disparity between book income and taxable income is attributable to a temporary difference, which will reverse in 2017. What should Weatherly record as a net deferred tax asset or liability for the year ended December 31, 2019, assuming that the enacted tax rates in effect are 35% in 2019 and 30% in 2020

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Emily · Answer 1

December 31, 2019

$402,500 deferred tax asset

$345,000 deferred tax asset

$402,500 deferred tax liability

$345,000 deferred tax liability

Explanation:

Weatherly Company

December 31, 2019

$402,500 deferred tax asset

$345,000 deferred tax asset

$402,500 deferred tax liability

$345,000 deferred tax liability

35%*$3,300,000=$1,155,000 Income

35%*4,450,000=$1,557,500 Taxable income

$1,155,000 - $1,557,500 = $402,500

30%*$3,300,000=$990,000 Income

30%*4,450,000=$1,335,000 Taxable income

$1,335,000 - $990,000 = $345,000