If a $150,000 balance in Deferred Tax Liability was computed by use of a 30% rate, the underlying cumulative temporary difference amounts to

$105,000

Explanation:

Given:

Balance in deferred tax liabilities = $150,000

Rate of computing deferred tax liabilities = 30% = = 0.30

Cumulative temporary difference = ?

Computation of Cumulative temporary difference:

Temporary difference = Balance in deferred tax liabilities - (Balance in deferred tax liabilities × Tax rate)

= $150,000 - ($150,000 × 0.30)

= $150,000 - $45,000

= 105,000

a.

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