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Question
During its first year of operations a company recorded accrued expenses totaling $375,000 for book purposes. For tax purposes, $175,000 of the expenses are deductible during the first year of operations and $200,000 are deductible during the second year of operations. The income tax rate was 40% during the first year of operations and 45% during the second year of operations. The balance sheet at the end of the first year of operations will report a deferred tax
A. asset of $80,000.
B. liability of $80,000.
C. liability of $90,000.
D. asset of $90,000.
Answer
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