Solution-Compute the value of deferred tax asset and

Compute the value of deferred tax asset and liabilities

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Reference no: EM132972479

Question - Bouncing Bob's Bicycle Boutique has the following information available regarding taxable income and the net book value of various balance sheet accounts

Taxable income: 2019, $312,000

Taxable income: 2020, $574,000

Plant Equipment:

NBV 2019, $651,000 Tax basis $543,000

NBV 2020, $743,000 Tax basis $606,000

NBV of Deferred Unearned revenue 2019, $2,000

NBV of Deferred Unearned revenue 2020, $ 13,000

NBV of Warranty (liability) 2019, $4,000

NBV of Warranty (liability) 2020, $5,100

Other information:

1. Amounts received as deferred/ unearned revenue are included in taxable income when received

2. Warranties expenditures are deductible when paid

3. The company's effective tax rate is 25%

Required -

a. Compute taxes payable for 2020.

b. Compute the value of deferred tax asset and liabilities at 12/31/2020.

c. Compute the change in deferred tax assets and liabilities from 12/31/2019 to 12/31/2020.

d. Compute tax expense for 2020.

e. Prepare the entry to record income tax expense for 2020.

Reference no: EM132972479

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Compute the value of deferred tax asset and liabilities

Reference no: EM132972479

Reference no: EM132972479

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