The Pink Diamonds Company installs fire alarm systems for large manufacturing enterprises and golf courses. Due to the design of their systems, some projects frequently extend over a two-year period. Pink Diamonds uses the percentage-of-completion method for financial accounting purposes and the completed-contract method for tax purposes. As of December 31, 2016, all projects were completed. The following information relates to projects started but not completed as of December 31, 2017:
Assuming an income tax rate of 30%, what amount should be included in the deferred tax liability account at December 31, 2017?

Question

The Pink Diamonds Company installs fire alarm systems for large manufacturing enterprises and golf courses. Due to the design of their systems, some projects frequently extend over a two-year period. Pink Diamonds uses the percentage-of-completion method for financial accounting purposes and the completed-contract method for tax purposes. As of December 31, 2016, all projects were completed. The following information relates to projects started but not completed as of December 31, 2017:  
Assuming an income tax rate of 30%, what amount should be included in the deferred tax liability account at December 31, 2017?

Quizplus · Accepted Answer

The Answer of The Pink Diamonds Company installs fire alarm systems for large manufacturing enterprises and golf courses. Due to the design of their systems, some projects frequently extend over a two-year period. Pink Diamonds uses the percentage-of-completion method for financial accounting purposes and the completed-contract method for tax purposes. As of December 31, 2016, all projects were completed. The following information relates to projects started but not completed as of December 31, 2017:  
Assuming an income tax rate of 30%, what amount should be included in the deferred tax liability account at December 31, 2017?

The Pink Diamonds Company Installs Fire Alarm Systems for Large