Question

eBook Calculator Print Item Exercise 14-19 (Algorithmic) (LO. 1, 4) Mini, Inc., ears pretax book net income of $1,678,000 in 2019. Mini deducted $191,600 in bad debt expense for book purposes. This expense is deductible for tax purposes. Mini reports $1,761,900 of pretax book net income in 2020. Mini did not recognize any bad debt expense for book purposes in 2020 but did deduct $143,700 in bad debt expense for tax purposes. Mini reports no other temporary or permanent differences. The applicable U.S. Federal corporate income tax rate is 21%, and Mini earns an after-tax rate of return on capital of 8%. Enter below the 2020 end-of-year balance in Mini's deferred tax asset and deferred tax liability balance sheet accounts. If an amount is zero, enter "o". If required, round your answer to nearest whole value. 2020 a. Deferred tax asset account balance $ 10,059 b. Deferred tax liability account balance $ 0 c. In net present value terms, what has been the cost to Mini of the deferred tax deduction for bad debts? The present value factor at 8% is 0.9259. $ 9,313.6281 X Feedback Y Check My Work The deferred component of the book-tax expense is called the deferred tax expense or deferred tax benefit. This component represents the fut tou cort (or cuinar connected with incomo ronarted in the current period financial statement.

c

Answer 1

please check the answer again because method is correct.

Computation of Deferred Tax Asset & li ahi ly balances Deferred Tax Asset 2014 : Bad Debt Expense in 2018 x Income Tax $ 71600 X 217: $40236 De feved Toe Assel 2020 - Bad debut Expense in 2020x Incom Tay $ 143700 x 21% $ 30117 Deferred Tase Asset Balance = $40236 - $30177 = $10059 Part (A) Deferred Taxe Liability of Part (B) Cost of Deferred Tax deduction = Deferred Tax Asset x PUAF@8. $10059 x 0.9259 - $ 9313.6281 Part (c)