[scubacamper]

I’m studying with Wiley CPAExcel and came across the following question:

Stone Co. begins operations in 2004 and reports $225,000 in income before income tax for the year. Stone’s 2004 tax depreciation exceeds its book depreciation by $25,000. Stone also has non-deductible book expenses of $10,000 related to permanent differences.

Stone’s tax rate for 2004 is 40%, and the enacted rate for years after 2004 is 35%. Stone elects early adoption of FASB Statement No. 109, Accounting for Income Taxes.

In its December 31, 2004 balance sheet, what amount of deferred income tax liability should Stone report?

The answer states $8,750 as a deferred tax liability, but shouldn’t it be a deferred tax asset?

B TBD
A TBD
R 57
F 62, 70, 65

[scubacamper]

Nevermind – I misread the question. It is indeed a DTL. oops 🙂

B TBD
A TBD
R 57
F 62, 70, 65

[Author]

Replies