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howard corp reports 10 million of depreciation expense on its income statement in 2018. on its...

howard corp reports 10 million of depreciation expense on its income statement in 2018. on its 2018 tax return, Howard claimed 8 million $ of depression expense. during 2018, Howard most likely:

a- has decreased deferred tax liability.

b- has committed tax fraud.

c- has increased deferred tax assets.

d- has decreased deferred tax assets.

e- has increased deferred tax liability.

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Answer #1

Howard most likely

has increased deferred tax assets

Deferred tax assets and deferred tax liabilities are created because there is difference in book profit/ income statement and income tax return that is in book profit/ income statement depreciation expense is 10 million and in tax return it is 8 million . There is difference of 2 million for which there will be benefit in future so there has increased deferred tax assets

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