Reference no: EM132540079

Question - Presented below is a condensed income statement for Aussie Direct Gear for its first year of business:

Revenues $330,000

Expenses $220,000

Income before taxes $110,000

The expenses include an accrual for bad debt expense of $9,950 in Year 1 and $9,650 during Year 2. Actual write offs occur in the year after the accrual. Aussie Direct Gear's effective income tax rate is 34%.

Required - How much will be reported as deferred income taxes at the end of Year 1?

A. $ 102 as Deferred tax liability

B. $ 102 as Deferred tax asset

C. $3,383 as Deferred tax asset

D. $3,383 as Deferred tax liability