[ELMON]

NINJA Question –

As a result of differences between depreciation for financial reporting purposes and TAX purposes, the financial reporting basis of Noor Co.’s sole DEPRECIABLE ASSET, acquired in 20X1, exceeded its tax basis by $250,000 at December 31, 20X1. The difference will reverse in future years. The enacted tax rate is 30% for 20X1 and 40% for future years. Noor has no other temporary differences. In its December 31, 20X1, BALANCE SHEET, how should Noor report the deferred tax effect of this difference?

the answer by Ninga Is (D) Deferred Tax Liability 100,000

I Want to clear that : if the financial income depreciation is more than the Tax Depreciation as stated In the Q SO that means the Financial Income Will Be Lower than taxable Income so that means the company will pay more now (taxable income is more than Financial income ) so it should be100,000 Assets not Liability answer (B)

Please Clear it to me

FAR- 88 MAY 2015
REG- 83 OCT 2015
BEC- 80 Jan 2016
AUD- 79 May 2016
NH
I am Done

Ninga MQ & SIMS Is the Best Way to Pass

[Oimie]

Bro I just got the same question wrong. I Googled it to see if I can find anything. I found an ally 🙂

But yes, I also agree it should be an deferred tax asset.

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[Oimie]

Nevermind, figured out where I went wrong on another post

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[Author]

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