Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.

Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below.

Amelia, Inc.'s, book income before tax is $25,200. Amelia records two permanent book-tax differences.

It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and
entertainment expense. Determine Amelia's change in net deferred tax asset or net deferred tax
liability for the current year, and provide the journal entry to record this amount.

Question

Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.
​
  
​
  
Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below.

Amelia, Inc.'s, book income before tax is $25,200. Amelia records two permanent book-tax differences.
  
It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and
entertainment expense. Determine Amelia's change in net deferred tax asset or net deferred tax
liability for the current year, and provide the journal entry to record this amount.

Quizplus · Accepted Answer

The Answer of Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.
​
  
​
  
Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below.

Amelia, Inc.'s, book income before tax is $25,200. Amelia records two permanent book-tax differences.
  
It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and
entertainment expense. Determine Amelia's change in net deferred tax asset or net deferred tax
liability for the current year, and provide the journal entry to record this amount.