Question
Cross Company reported the following results for the year ended December 31, Year 13, its first year of operations: Income (per books before income taxes)
Cross Company reported the following results for the year ended December 31, Year 13, its first year of operations:
Income (per books before income taxes) | $750,000 |
Taxable Income | 1,200,000 |
The difference between book income and taxable income is due to a temporary difference which will reverse in Year 14. What should Cross record as a net deferred tax asset or liability for the year ended December 31, Year 13, assuming that the enacted tax rates in effect are 35% for Year 13 and 40% for Year 14?
A. | $157,500 deferred tax liability. | |
B. | $157,500 deferred tax asset. | |
C. | $180,000 deferred tax liability. | |
D. | $180,000 deferred tax asset. lplease show work
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