Leonard Ltd. recorded revenue in 20X6 in the amount of $100,000. The amount will be collected from
Question:
Leonard Ltd. recorded revenue in 20X6 in the amount of $100,000. The amount will be collected from the customer in the amount of $40,000 in 20X7 and $60,000 in 20X8. The revenue will be taxable when the cash is received. Leonard’s income tax rate is 22%.
Required:
For each 31 December 20X6 through 20X8, determine:
1. The tax basis for the account receivable.
2. The accounting basis for the account receivable.
3. The cumulative amount of the temporary difference relating to the account receivable.
4. The balance of deferred income tax asset or liability that would be reported on the statement of financial position.
5. The amount of the deferred income tax adjustment.
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel