Question

Calculate the deferred tax liability given the following Items Incurred In 2020 by Company B. Bonuses are tax deductible only in the year in which they are paid. AccountingIncome $86,000 Deprec1at1on Expense $6,500 Tax Depreciation $4,000 Income Not Recognized InThe Current Period For Tax Purposes $4,700 2019 Bonus Paid in 2020 $2,630 Accrued Bonuses in 2020 $3,500 Tax Rate 28%

Answer 1

The deferred tax liability in 2020 for Company B.  would be $372.

How much of the deferred tax liability is incurred?

First, we have to find the taxable income:

= $86,000 + $6,500 + $3,500 -$ 4,000 - $4,700 - $2,630

= $84,670

Now, as the accounting income of $86,000 is more than the taxable income of $84,670, there will be a deferred tax liability of:

= ($86,000 - $84,670) * 28%

= $1,330 * 28%

= $372

Therefore, the deferred tax liability in 2020 for Company B.  would be $372.

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