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?
Step by Step Answer:
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer