Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year.Assume a 35% corporate tax rate and no valuation allowance.
Assets Cash Accounts Receivable Buildings Acc. Depreciation Furniture & Fixtures Acc. Depreciation Total Assets Liabilities Accrued Litigation Expense Note Payable Total Liabilities Stockholders’ Equity Paid in Capital Retained Earnings Total Liabilities and Stockholders’ Equity Tax Debit/(Credit) $3005,000300,000(150,000)40,000(21,000)$174,300$−0−(116,000)($116,000)($1,000)(57,300)($174,300)Book Debit/(Credit) $3005,000300,000(80,000)40,000(15,000)$250,300($27,000)(116,000)($143,000)($1,000)(106,300)($250,300)
Black, Inc.'s, book income before tax is $6,000.Black records two permanent book-tax differences.It earned $250 in tax-exempt municipal bond interest, and it incurred $500 in nondeductible meals and entertainment expense.Determine the change in Black's deferred tax assets for the current year.
Definitions:
Accord and Satisfaction
A legal agreement between parties to settle a dispute by one party paying a sum less than the amount originally owed and the other accepting it, effectively discharging the original claim.
Obligations
Duties or commitments imposed by law, contract, or moral responsibilities.
Monetary Damages
Compensation awarded to a plaintiff in a lawsuit as a monetary payment for losses or injuries incurred.
Legal Remedies
Solutions provided by a court of law, typically involving compensation or specific performance as a resolution to a legal dispute.