Dunn, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Installment income of $3,000,000 will be collected in the following years when the enacted tax rates are: Collection of Income Enacted Tax Rates 2020 $300,000 25% 2021 600,000 20% 2022 900,000 20% 2023 1,200,000 15% The installment income is Dunn's only temporary difference. What amount should be included in the deferred income tax liability in Dunn's December 31, 2020 balance sheet? a. $480,000 b. $555,000 c. $675,000 d. $750,000
Dunn, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Installment income of $3,000,000 will be collected in the following years when the enacted tax rates are: Collection of Income Enacted Tax Rates 2020 $300,000 25% 2021 600,000 20% 2022 900,000 20% 2023 1,200,000 15% The installment income is Dunn's only temporary difference. What amount should be included in the deferred income tax liability in Dunn's December 31, 2020 balance sheet? a. $480,000 b. $555,000 c. $675,000 d. $750,000
Chapter14: Taxes On The Financial Statements
Section: Chapter Questions
Problem 20CE
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Dunn, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Installment income of $3,000,000 will be collected in the following years when the enacted tax rates are:
Collection of Income Enacted Tax Rates
2020 $300,000 25%
2021 600,000 20%
2022 900,000 20%
2023 1,200,000 15%
The installment income is Dunn's only temporary difference. What amount should be included in the deferred income tax liability in Dunn's December 31, 2020 balance sheet?
a. $480,000
b. $555,000
c. $675,000
d. $750,000
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