Asset in its books with carrying amount

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Reference no: EM131219144

Able Ltd has an asset in its books with a carrying amount of $120,000 and a tax base of $90,000. The income tax rate has been 30% but in the current year it has been increased to 40%. Able Ltd should make the following entry in its books:

A Dr Deferred Income Tax Expense $12 000 Cr Deferred Tax Liability $12 000

B Dr Deferred Tax Asset $3 000 Cr Deferred Income Tax Expense $3 000

C Dr Deferred Tax Liability $3 000 Cr Deferred Income Tax Expense $3 000

D Dr Deferred Income Tax Expense $3 000 Cr Deferred Tax Liability $3 000

Reference no: EM131219144

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