I'm reviewin for my test in a couple weeks and i might be missing.
Both of these question records a tax-liability on the b/s but I have not idea why. To me, it seems that you have additional expense for tax purposes in one year that will be reversed in the future AND you have an accounting expense that will be reversed in the future.
Can someone explain this to me. These are basically two opposite questions so I know one records an asset and the other records a liability.
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?
For its first year of operations, Cable Corp. recorded a $100,000 expense in its tax return that will not be recorded in its accounting records until next year. There were no other differences between its taxable and financial statement income. Cable's effective tax rate for the current year is 45%, but a 40% rate has already been passed into law for next year. In its year-end balance sheet, what amount should Cable report as a deferred tax asset (liability)?
REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016
.