Indigo corporation began operations in 2017 and reported pretax financial income of $228,000 for the year. indigo’s tax depreciation exceeded its book depreciation by $38,000. indigo’s tax rate for 2017 and years thereafter is 30%. in its december 31, 2017, balance sheet, what amount of deferred tax liability should be reported? deferred tax liability to be reported $

Deferred Tax Liability = $11,400   Credit  

Explanation:

given data

pretax financial income = $228,000

Indigo’s tax depreciation = $38,000

tax rate = 30 %

solution

we know here that Income Tax Expense is

Income Tax Expense = $228,000 × 30%  

Income Tax Expense =  $68400    Dr

so as that

Deferred Tax Liability will be here

Deferred Tax Liability =  $38000 × 30%

Deferred Tax Liability =  $38000 × 0.30

Deferred Tax Liability = $11,400   Credit  

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