Wilkins Inc

question 54

Essay

Wilkins Inc. owned 60% of Motumbo Co. During the current year, Motumbo reported net income of $280,000 but paid a total cash dividend of only $56,000.Required: Assuming an income tax rate of 30%, what amount of Deferred Income Tax Liability arising this year must be recognized in the consolidated balance sheet?

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Definitions:

Hybrid Costing System

A costing system that blends elements of both job costing and process costing methods, suitable for industries that manufacture items in batches.

Applied Overhead

The estimated overhead cost assigned to individual units of production.

Finished Goods Inventory

Merchandise that has finished the production phase but has not yet been delivered or sold to purchasers.

Process Costing

A method of costing used in manufacturing where the cost of products is determined by averaging over units produced, typically used in industries where the production is continuous.