If income tax expense reported on the income statement is $45,000 for 2019,and the tax return for 2019 (the first year)shows an income tax liability of $42,000,the deferred income tax on the balance sheet at the end of 2019 will be which of the following? Assume a 21% tax rate.
A)A $3,000 liability.
B)A $3,000 asset.
C)A $7,500 liability.
D)A $7,500 asset.

Question

Quizplus · Accepted Answer

The deferred income tax is the difference between the income tax expense and the income tax liability. Here, $45,000 - $42,000 = $3,000, which is a liability.

If Income Tax Expense Reported on the Income Statement Is