At December 31, 20X4, MJB Co. had the following deferred income tax items:
At December 31, 20X4, MJB Co. had the following deferred income tax items:
• A deferred income tax liability of $15,000 related to a noncurrent asset
• A deferred income tax asset of $3,000 related to a current liability
• A deferred income tax liability of $8,000 related to a current asset
Which of the following should MJB report in the noncurrent section(s) of its December 31, 20X4 balance sheet?
Select one:
a. DTL of $8,000 in Noncurrent Liabilities, DTA of $3,000 in Noncurrent Assets
b. Net DTA of $3,000 in Noncurrent Assets
c. Net DTA of $5,000 in Noncurrent Assets
d. Net DTL of $20,000 in Noncurrent Liabilities
e. Net DTL of $5,000 in Noncurrent Liabilities
Homework Answers
The correct answer is
d) Net DTL of $ 20000 in Non Current Liabilities
Explanation and Calculation
Net liability/ (asset) of deferred tax liability
= deferred tax liability of $ 15000+ deferred tax liability of $ 8000 - deferred tax asset of $3000
= 15000+8000-3000
= $ 20000 DTL in non current liabilities.
d. Net DTL of $20,000 in Noncurrent Liabilities.
Total Deferred tax liability = $15,000 + $8,000 = $23,000
Total Deferred tax asset = $3,000
Net Deferred tax liability of $ 20,000 (23,000-3,000)
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