Computing net deferred tax liability

Reference no: EM13150062

Smiley Corporation purchased a machine on January 2, 2009, for $2,000,000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes:

2009 $400,000 2012 $230,000
2010 $640,000 2013 $230,000
2011 $384,000 2014 $116,000

Assuming an income tax rate of 30% for all years, the net deferred tax liability that should be reflected on Smiley's balance sheet at December 31, 2010, should be

Deferred Tax Liability

Current Noncurrent

a. $0 $72,000

b. $ 4,800 $67,200

c. $67,200 $4,800

d. $72,000 $0

Reference no: EM13150062

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