Question

Apple, Inc. had pre-tax accounting income of $2,500,000 and a tax rate of 20% in 2021, its first year of operations. During 2021 the company had the following transactions:

     Received rent from York, Co. for 2022                                         $ 85,000

     Municipal bond income                                                            $150,000

     Depreciation for tax purposes in excess of book depreciation     $60,000

Compute the deferred tax asset balance at December 31, 2021.

Answer 1

Deferred Tax Asset balance on 31 , 2021= (85000*20$)=$17000

Detail Explanation:_

Recieved rent from YorK Co. for 2022 , $85000 will be considered while computation taxable income . however same will not be considered while computing income as per Accounting Income for 2021 and will be included while  computing 2022 as per accounting income . hence , such amount will be treated as temporary difference and deferred taxa asset account need to be created.