What should be the balance in Kent's deferred tax liability account as of December 31, 2013?

Question

Quizplus · Accepted Answer

The balance in the deferred tax liability account can be calculated as follows: 
Taxable income per books in 2013 = $75,000 - $20,000 = $55,000 
Taxable income per tax return in 2013 = $80,000 
The temporary difference = $80,000 - $55,000 = $25,000 
The tax rate is 30%, so the deferred tax liability = $25,000 * 30% = $7,500.

What Should Be the Balance in Kent's Deferred Tax Liability