Black Co
Subject:AccountingPrice:3.87 Bought7
Black Co. organized on January 2, 2016, had pretax financial statement income of $500,000 and taxable income of $800,000 for the year ended December 31, 2016. The only temporary differences are accrued product warranty costs, which Black expects to pay as follows:
Black Co. organized on January 2, 2016, had pretax financial statement income of $500,000 and taxable income of $800,000 for the year ended December 31, 2016. The only temporary differences are accrued product warranty costs, which Black expects to pay as follows:
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2017 |
$100,000 |
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2018 |
$ 50,000 |
|
2019 |
$ 50,000 |
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2020 |
$100,000 |
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The enacted income tax rates are 25% for 2016, 30% for 2017 through 2019, and 35% for 2020. Black believes that future years’ operations will produce profits. In its December 31, 2016, balance sheet, what amount should Black report as deferred tax asset?
A. $75,000
B. $50,000
C. $90,000
D. $95,000
