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    Tax Liability for Rubard Farms

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    Rubard Farms depreciates its assets at a faster rate for tax purposes then for GAAP financial statements purposes, and invests heavily in municipal bonds. In its first year of operations, the year ended December 31, 20X3, Rubarb's pretax financial income reconciles to its tax return income as follows:
    Pre-tax financial income ...............$200,000
    Excess depreciation per tax return .....(40,000)
    Municipal bond interest.................. (10,000)
    Taxable income ...........................$150,000
    If the enacted tax rate for current and future periods were 25%, Rubarb would record a deferred tax liability of how much?

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    https://brainmass.com/business/accounting/tax-liability-rubard-farms-251543

    Solution Summary

    The solution examines tax liability for Rubarb Farms.

    $2.19

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