Duncan Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Profits of $600,000 recognized for books in 2014 will be collected in the following years: The enacted tax rates are: 40% for 2014, 35% for 2015, and 30% for 2016 and 2017. Taxable income is expected in all future years. What amount should be included in the December 31, 2014, balance sheet for the deferred tax liability related to the above temporary difference?

Question

Duncan Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Profits of $600,000 recognized for books in 2014 will be collected in the following years:  The enacted tax rates are: 40% for 2014, 35% for 2015, and 30% for 2016 and 2017. Taxable income is expected in all future years. What amount should be included in the December 31, 2014, balance sheet for the deferred tax liability related to the above temporary difference?

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The Answer of Duncan Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Profits of $600,000 recognized for books in 2014 will be collected in the following years:  The enacted tax rates are: 40% for 2014, 35% for 2015, and 30% for 2016 and 2017. Taxable income is expected in all future years. What amount should be included in the December 31, 2014, balance sheet for the deferred tax liability related to the above temporary difference?