Moss Inc. follows GAAP for financial reporting purposes and appropriately uses the installment method of accounting for

Question:

Moss Inc. follows GAAP for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. It reported $250,000 of pre-tax income under GAAP, but it will report the corresponding taxable income in the following years. The enacted tax rate is 35%.

                                                        Taxable Income                        
                2016                                     $ 25,000
                2017                                        50,000
                2018                                        75,000
                2019                                      100,000

The installment income is the firm’s only temporary difference.

Required:
What amount should be included as the deferred tax liability in Moss’s December 31, 2016, balance sheet?

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Related Book For  book-img-for-question

Financial Reporting and Analysis

ISBN: 978-1259722653

7th edition

Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer

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