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14 December, 02:02

Indigo Corporation began operations in 2017 and reported pretax financial income of $228,000 for the year. Indigo's tax depreciation exceeded its book depreciation by $38,000. Indigo's tax rate for 2017 and years thereafter is 30%. In its December 31, 2017, balance sheet, what amount of deferred tax liability should be reported? Deferred tax liability to be reported $

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  1. 14 December, 02:20
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    Deferred Tax Liability = $11,400 Credit

    Explanation:

    given data

    pretax financial income = $228,000

    Indigo's tax depreciation = $38,000

    tax rate = 30 %

    solution

    we know here that Income Tax Expense is

    Income Tax Expense = $228,000 * 30%

    Income Tax Expense = $68400 Dr

    so as that

    Deferred Tax Liability will be here

    Deferred Tax Liability = $38000 * 30%

    Deferred Tax Liability = $38000 * 0.30

    Deferred Tax Liability = $11,400 Credit
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