Viking Corporation reported depreciation of $250,000 on its 2011 tax return. However, in its 2011 income statement, Viking reported depreciation of $100,000. The difference in depreciation is a temporary difference that will reverse over time. Assuming Viking's tax rate is constant at 30 percent, what amount should be added to the deferred income tax liability in Viking's December 31, 2011, balance sheet?

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Quizplus · Accepted Answer

The temporary difference is $150,000 ($250,000 - $100,000). The deferred tax liability is calculated as the temporary difference multiplied by the tax rate: $150,000 * 30% = $45,000.

Viking Corporation Reported Depreciation of $250,000 on Its 2011 Tax