Question

Youngman Corporation has temporary differences at December 31, 2017, that result in the following deferred taxes.

Deferred tax asset $24,000

Deferred tax liability 69,000

Indicate how these balances would be presented in Youngman’s December 31, 2017, statement of financial position.

Short answer

Deferred tax liability of $45,000, will be reported under non-current liability on balance sheet.

Step-by-step solution

Meaning of Income-tax

Income tax is charge on the net income generated by the business, which is payable to the government authority.

Showing deferred tax liability in financial statements

Non-current liabilities
Deferred tax liability	$45,000

Working notes:

Calculation of deferred tax liability

$\begin{array}{c}\mathbf{Deferred}\mathbf{tax}\mathbf{=}\mathbf{Deferred}\mathbf{tax}\mathbf{liability}-\mathbf{Deferred}\mathbf{tax}\mathbf{asset}\\ \mathbf{=}\mathbf{\$}\mathbf{69}\mathbf{,}\mathbf{000}-\mathbf{\$}\mathbf{24}\mathbf{,}\mathbf{000}\\ =\$45,000\end{array}$