Question

Differences between financial statement and taxable income were as follows:

Answer 1

Answer:

Deferred tax liability = $26,000,000

Explanation:

The deferred tax liability is calculated at the tax rate of 40% on the future taxable income:

Deferred tax liability = $104,000,000*25%

Deferred tax liability = $26,000,000

Thus, $260,00,000 is the deferred tax asset or liability amount to be reported in the balance sheet as current or long term.