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Calculate the deferred tax liability given the following items incurred in 2020 by Company B. Bonuses are tax deductible only in the year in which they are paid. Accounting Income $86,000 Depreciation Expense $6,500 Tax Depreciation $4,000 Income Not Recognized in The Current Period For Tax Purposes $4,700 2019 Bonus Paid in 2020 $2,630 Accrued Bonuses in 2020 $3,500 Tax Rate 28%

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Based on the financial items given by Company B., the deferred tax liability in 2020 would be $372.

How much deferred tax liability is incurred?

First, find the taxable income:

= 86,000 + 6,500 + 3,500 - 4,000 - 4,700 - 2,630

= $84,670

Because the accounting income of $86,000 is more than the taxable income of $84,670, there will be a deferred tax liability of:

= (86,000 - 84,670) x 28%

= $372

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