Which deferred taxes should be presented on Sarasota Company

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Question - At December 31, 2019, Sarasota Company had a net deferred tax liability of $394,900. An explanation of the items that compose this balance is as follows.

Temporary Differences

Resulting Balances in Deferred Taxes

1. Excess of tax depreciation over book depreciation

$209,000

2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2020. The loss will be deducted on the tax return when paid.

(52,200)

3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment.

238,100

 

$394,900

In analyzing the temporary differences, you find that $28,100 of the depreciation temporary difference will reverse in 2020, and $124,700 of the temporary difference due to the installment sale will reverse in 2020. The tax rate for all years is 20%.

Indicate the manner in which deferred taxes should be presented on Sarasota Company's December 31, 2019, balance sheet.

Reference no: EM132430537

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