Question:In computing its income tax expense for the current year (its first year of operations), XYZ Company has an $18,000 temporary difference (accelerated depreciation for tax purposes). It is assumed that a tax rate of 35 percent will apply to the future period of taxable income. The company's income for tax purposes is $282,000 and the current tax rate is 40 percent. How would XYZ Company report the tax effect of the temporary difference on its Balance Sheet for the current year?
A As a deferred tax asset of $7,200
B As a deferred tax liability of $7,200
C As a deferred tax asset of $6,300
D As a deferred tax liability of $6,300
+ AnswerD
+ Explanation
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