A company's income statement reported net income of $40,000 during 2010.The income tax return excluded a revenue item of $3,000 (reported on the income statement)because under the tax laws the $3,000 would not be reported for tax purposes until 2011.Which of the following statements is correct assuming a 35% tax rate?
A)A $3,000 deferred tax liability is reported as of December 31, 2010.
B)A $3,000 deferred tax asset is reported as of December 31, 2010.
C)A $1,050 deferred tax liability is reported as of December 31, 2010.
D)A $1,050 deferred tax asset is reported as of December 31, 2010.

Question

Quizplus · Accepted Answer

The $3,000 future taxable amount creates a $1,050 deferred tax liability ($3,000 F1F1F1S1F1F1F10 .35).

A Company's Income Statement Reported Net Income of $40,000 During