Reference no: EM132543737

Question 1: Rowen, Inc. had pre-tax accounting income of €900,000 and a tax rate of 40% in 2018, its first year of operations. During 2018 the company had the following transactions: Received rent from Jane, Co. for 2019 €32,000, Government bonds interest income €40,000, Depreciation for tax purposes in excess of book depreciation €20,000, Installment sales revenue to be collected in 2019 €54,000. At the end of 2018, which of the following deferred tax accounts and balances is reported on Rowen, Inc.'s statement of financial position?

Option a. Deferred tax asset €12,800

Option b. Deferred tax liability €12,800

Option c. Deferred tax asset €20,800

Option d. Deferred tax liability €20,800