Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the
end of the year. Assume a 35% corporate tax rate and no valuation allowance.
Black, Inc.'s, book income before tax is $6,000. Black records two permanent book-tax differences.
It earned $250 in tax-exempt municipal bond interest, and it incurred $500 in nondeductible meals
and entertainment expense. Determine the net deferred tax asset or net deferred tax liability at year end.

Question

Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the
end of the year. Assume a 35% corporate tax rate and no valuation allowance.  ​
Black, Inc.'s, book income before tax is $6,000. Black records two permanent book-tax differences.
It earned $250 in tax-exempt municipal bond interest, and it incurred $500 in nondeductible meals
and entertainment expense. Determine the net deferred tax asset or net deferred tax liability at year end.

Quizplus · Accepted Answer

The Answer of Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the
end of the year. Assume a 35% corporate tax rate and no valuation allowance.  ​
Black, Inc.'s, book income before tax is $6,000. Black records two permanent book-tax differences.
It earned $250 in tax-exempt municipal bond interest, and it incurred $500 in nondeductible meals
and entertainment expense. Determine the net deferred tax asset or net deferred tax liability at year end.