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The financial reporting carrying amount of Johns-Hopper Company's only depreciable asset exceeded its tax basis by...

The financial reporting carrying amount of Johns-Hopper Company's only depreciable asset exceeded its tax basis by $750,000 at December 31, 2018. This was a result of differences between depreciation for financial reporting purposes and tax purposes. The asset was acquired earlier in the year. Johns-Hopper has no other temporary differences. The enacted tax rate is 30% for 2018 and 40% thereafter. Johns-Hopper should report the deferred tax effect of this difference in its December 31, 2018, balance sheet as:

Multiple Choice

  • An asset of $300,000.

  • A liability of $225,000.

  • An asset of $225,000.

  • A liability of $300,000.

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