Reference no: EM132999022

Crane Company reported the following results for the year ended December 31, 2021, its first year of operations:

2021

Income (per books before income taxes) $1412000

Taxable income 2600000

Problem 1: The disparity between book income and taxable income is attributable to a temporary difference which will reverse in 2022. What should Crane record as a net deferred tax asset or liability for the year ended December 31, 2021, assuming that the enacted tax rates in effect are 30% in 2021 and 25% in 2022?

Option 1: $297000 deferred tax liability

Option 2: $356400 deferred tax asset

Option 3: $356400 deferred tax liability

Option 4: $297000 deferred tax asset