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Real Food Chef bought a long-term investment on January 1, 20X1. Information on the investment is...

Real Food Chef bought a long-term investment on January 1, 20X1. Information on the investment is as follows. Cost 415,000 Fair value at December 31, 20X1 452,000 Fair value at December 31, 20X2 469,000 Fair value at December 31, 20X3 436,000 Tax rate 21% What is the balance of deferred taxes payable-long-term investment at December 31, 20X3?

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Answer #1

Answer: 2,80,560

Cost of Investment on Jan. 1, 20X1 = 4,15,000

Fair Value on Dec. 31, 20X1= 4,52,000

Fair Value on Dec. 31, 20X2, 4,69,000

Fair Value on Dec. 31, 20X3= 4,36,000

Tax Payble on Dec. 31, 20X1= 4,15,000 X 21%= 87, 150

Tax Payble on Dec. 31, 20X2= 4,,52,000 X 21%= 94,920

Tax Payble on Dec. 31, 20X3= 4,69,000 X 21%= 98, 490

Hence the balance of deferred taxes payable-long-term investment at December 31, 20X3=

87,150 + 94,920 + 98,490 = 2,80,560.

(Tax Payble on 20X1 + Tax Payble on 20X2 + Tax Payble on 20X3 )

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