Larsen Corporation reported $100,000 in revenues in its 2014 financial statements, of which $33,000 will not be included in the tax return until 2015. The enacted tax rate is 40% for 2014 and 35% for 2015. What amount should Larsen report for deferred income tax liability in its balance sheet at December 31, 2014?

Question

Quizplus · Accepted Answer

The deferred income tax liability is calculated on the temporary difference of $33,000 at the future tax rate of 35%, resulting in $11,550 ($33,000 * 35%).

Larsen Corporation Reported $100,000 in Revenues in Its 2014 Financial