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Gobble Goop Corp incorporated in 2008. In their current year (2011), the company has furnished you (a super star accountant) with the following information regarding

Gobble Goop Corp incorporated in 2008. In their current year (2011), the company has furnished you (a super star accountant) with the following information regarding their financial and tax returns: Sales with installments are reported at $50,000. For tax purposes, these sales are listed at $42,000. Bad debt expenses for the year are $4,500. During the year, $3,000 of bad debts were written-off. Depreciation per financial statements amounted to $85,000 and $98,000 for tax purposes. A new air hockey table cost $6,000. The company paid $10,000 in speeding tickets. The company collected $35,000 from a life insurance policy. Gobble Goop also have a $25,000 deferred tax asset and a $45,000 deferred tax liability. Net income for the year is $125,000 (pre tax) and the tax rate is 30%. What would it be if the installment sales were a reversing difference? What if the tax rate changed from 30% to 40% at the beginning of the year? What if the deferred tax asset was a NOL?

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SOLUTION 1 If the installment sales were a reversing difference how would the company account for the reversing difference in its financial statements ... blur-text-image

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