Question
As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of NoorCo.'s sole depreciable asset, acquired in
As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of NoorCo.'s sole depreciable asset, acquired in Year 1, exceeded its tax basis by $250,000 at December 31, Year 1. This difference will reverse in future years. The enacted tax rate is 30% for Year 1, and 21% for future years. Noor has no other temporary differences. In its December31, Year 1, balance sheet, how should Noorreport the deferred tax effect of this difference?
a.
As a liability of $75,000.
b.
As an asset of $52,500.
c.
As an asset of $75,000.
d.
As a liability of $52,500.
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