Response to the following problem:
Energizer Manufacturing Corporation reports taxable income of $829,000 on its income tax return for the year ended December 31, 2013, its first year of operations. Temporary differences between financial accounting income and taxable income for the year are:
Tax depreciation in excess of financial accounting depreciation $80,000
Accrual for product liability claims in excess of actual claims
(only actual claims are deductible for tax purposes) 125,000
Reported installment sales income in excess of taxable installment sales income 265,000
The income tax rate is 40 percent for 2013 and all future years.
1. Compute the amount of income taxes payable for 2013.
2. Determine the amount of deferred tax asset and deferred tax liability to be reported on Energizer's balance sheet as of December 31, 2013.