As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting
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As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of Noor Company’s sole depreciable asset, acquired in 2008, exceeded its tax basis by $250,000 at December 31, 2008. This difference will reverse in future years. The enacted tax rate is 30% for 2008, and 40% for future years. Noor has no other temporary differences.
Required:
In its December 31, 2008, balance sheet, how much should Noor report as the deferred tax effect of this difference? Indicate the amount and whether it is an asset or a liability.
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