Mini, Inc., earns pretax book net income of $750,000 in 2018. Mini deducted $20,
ID: 2337573 • Letter: M
Question
Mini, Inc., earns pretax book net income of $750,000 in 2018. Mini deducted $20,000 in bad debt expense for book purposes. This expense is not yet deductible for tax purposes. Mini records no other temporary or permanent differences. Assuming that the pertinent U.S. tax rate is 21%.
Enter below the 2018 end-of-year balance in Mini, Inc.'s deferred tax asset and deferred tax liability balance sheet accounts.
If amount is zero, enter "0".
a. Deferred tax asset account balance $ b. Deferred tax liability account balance $Explanation / Answer
The book-tax difference in the expense is $ 20,000. If Accounting income Less than taxable Income-Deferred Tax Asset is recognised. The deferred tax asset is this difference multipied by the corporate tax rate 21% i,e $20,000 x 21% =$4,200
a. Deferred tax asset account balance =$4,200
b. Deferred tax liability account balance = $ 0