Question

Information for Kent Corp. for the year 2021:

Reconciliation of pretax accounting income and taxable income:


Pretax accounting income $ 179,100

Permanent differences (13,600 ) 165,500

Temporary difference-depreciation (11,700 )

Taxable income $ 153,800

Cumulative future taxable amounts all from depreciation temporary differences:

As of December 31, 2020 $ 12,500

As of December 31, 2021 $ 24,200

The enacted tax rate was 21% for 2020 and thereafter.


What should be the balance in Kent's deferred tax liability account as of December 31, 2021?

Answer 1

Answer:

$5,082

Explanation:

Calculation of the balance in Kent's deferred tax liability account as of December 31, 2021

Using this formula

Deferred tax liability balance =Cumulative future taxable amounts*Enacted tax rate

Where,

2021 Cumulative future taxable amounts =$24,200

Enacted tax rate=21%

Let plug in the formula

Deferred tax liability balance =$24,200*21%

Deferred tax liability balance =$5,082

Therefore the balance in Kent's deferred tax liability account as of December 31, 2021 will be $5,082