Assuming that the enacted tax rate is 30 in both 2007 and, Ask an Expert

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In 2007, Hay Company accrued, for financial statement reporting, estimated losses on disposal of unused plant facilities of $1,500,000. The facilities were sold in March 2008 and a $1,500,000 loss was recognized for tax purposes. Also in 2007, Hay paid $100,000 in premiums for a two-year life insurance policy in which the company was the beneficiary. Assuming that the enacted tax rate is 30% in both 2007 and 2008, and that Admire paid $780,000 in income taxes in 2007, the amount reported as net deferred income taxes on Hay balance sheet at December 31, 2007, should be a:

a. $420,000 asset.

b. $360,000 liability

c. $450,000 asset

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M995235

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