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qaws [65]
3 years ago
15

In its 2021 income statement, Cohen Corp. reported depreciation of $3,700,000 and interest revenue on municipal obligations of $

700,000. Cohen reported depreciation of $5,500,000 on its 2021 income tax return. The depreciation difference will reverse equally over the next three years. Cohen's enacted income tax rates are 25% for 2021, 20% for 2022, and 15% for 2023 and 2024. What amount should be included in the deferred income tax liability in Hertz's December 31, 2021 balance sheet
Business
1 answer:
ella [17]3 years ago
5 0

Answer:

The correct answer is $300,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

First we calculate the difference in depreciation,

So, difference in depreciation = $5,500,000 - $3,700,000 = $1,800,000

As, Depreciation is for 3 years,

So, depreciation per year = $1,800,000 ÷ 3 = $600,000

Now, we can calculate the deferred income tax liability as follows:

Deferred income tax liability = $600,000 × 20% + $600,000 × 15% + $600,000 × 15%

= $120,000 + $90,000 + $90,000

= $300,000

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