For financial statement reporting, Lexington Corporation recognizes royalty income in the period earned. However, royalties are taxed

Question:

For financial statement reporting, Lexington recognizes royalty income in the period earned. However, royalties are taxed when collected. At December 31, 2013, unearned royalties of $400,000 were included in Lexington’s All of these royalties had been collected in 2013. During 2014, royalties of $600,000 were collected. Unearned royalties in Lexington’s December 31, 2014, amounted to $350,000. Assume that the income tax rate was 40%.

Required:
What amount should be reported as the deferred portion of the provision for income taxes in Lexington’s income statement for the year ended December 31, 2014?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
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