Blossom Inc's only temporary difference at the beginning and end of 2024 is caused by a $3.03 million deferred gain for tax purposesfor an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equalinstallments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $909,000. In the third quarter of 2024,a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $5,050,000, andtaxable income is expected in all future years.(a)Determine the amount reported as a deferred tax liability at the end of 2024.Deferred tax liability$

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(a) Determine the amount reported as a deferred tax liability at the end of 2024. Deferred tax liability $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Blossom Inc's only temporary difference at the beginning and end of 2024 is caused by a $3.03 million deferred gain for tax purposes
for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal
installments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $909,000. In the third quarter of 2024,
a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $5,050,000, and
taxable income is expected in all future years.
(a)
Determine the amount reported as a deferred tax liability at the end of 2024.
Deferred tax liability
$

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