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Temporary difference;determine deferred tax amount for three years

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Question;P 16?2 Temporary difference, determine deferred tax amount for three years, balance sheet classification ? LO16?2, LO16?8 The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when earned. The income tax rate is 40% each year. Times-Roman anticipates profitable operations in the future. $ in 000s) 2013 2014 2015 Pretax accounting income 250 240 230 Taxable income 290 220 260 Required: 1. What is the balance sheet account for which a temporary difference is created by this situation? 2. For each year, indicate the cumulative amount of the temporary difference at year-end. 3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? 4. How should the deferred tax amount be classified and reported in the balance sheet?

 

Paper#50604 | Written in 18-Jul-2015

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