Question
On January 1, 2021, Neo Inc. purchased a depreciable asset for $477,000 with an estimated useful life of 18 years and no estimated salvage value.
On January 1, 2021, Neo Inc. purchased a depreciable asset for $477,000 with an estimated useful life of 18 years and no estimated salvage value. For financial reporting purposes, the asset is being depreciated using the straight-line method. For tax purposes, the double-declining-balance method is being used. Neo Inc.s tax rate is 33% for 2021 and all future years.
At the end of 2021, which of the following deferred tax accounts and balances should be reported on Neo Inc.s balance sheet?
Deferred tax liability: $8,745
Deferred tax asset: $26,500
Deferred tax liability: $26,500
Deferred tax asset: $8,745
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