Please make the response detailed and easy to read, thank you Reporting a Deferred Tax...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Please make the response detailed and easy to read, thank you
Reporting a Deferred Tax Liability
On December 31, 2020, Lexxus Inc. recorded an unrealized gain in income of $5,000 related to its trading debt securities originally purchased on December 15, 2020, for $20,000. Lexxus recognized pretax GAAP income of $80,000 in 2020 and had a tax rate of 25%.
a. Determine the reported amount of trading securities in the financial statements of Lexxus on December 30, 2020. Trading securities (GAAP basis) $ 5,000 x b. Determine the tax basis of the trading securities on December 30, 2020. Trading securities (tax basis) $ 20,000 C. Calculate the deferred tax balance and show how it would be reported in the December 31, 2020, balance sheet of Lexxus. 1 2020 Balance Sheet, Dec. 31 Noncurrent liabilities Deferred Tax Liability $ 1,250
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
