Income tax expense reported on the income statement is $45,000 for 20A, and the tax return for 20A (the first year) shows an income tax liability of $42,000 because of a deduction that cannot be taken until 20B. The future income tax amount on the statement of financial position at the end of 20A will be which of the following?

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Quizplus · Accepted Answer

The future income tax amount on the statement of financial position at the end of 20A will be a credit of $3,000. This is because the income tax expense reported on the income statement is $45,000, but the tax return for 20A shows an income tax liability of $42,000. The difference between these two amounts is $3,000, which is the amount of the future income tax liability.

Income Tax Expense Reported on the Income Statement Is $45,000