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 the net deferred tax asset or net deferred tax liability at year end.

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.
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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 the net deferred tax asset or net deferred tax liability at year end.

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 the net deferred tax asset or net deferred tax liability at year end.