Accounting Mystery Tip

Let us assume you have reported (accounting) income of 100. Of that 100, you receive 10 of rent received in advance, therefore you do NOT record the revenue until next year (currently it is on the books as unearned revenue). Moreover, you will have 20 more in tax depreciation than that of accounting.

​And with a 20% tax rate, you are looking at a Dr. DTA of 2 (20% of 10), Cr. DTL 4 (20% of 20), and Cr. Taxes Payable of 27 [(100+10-20) * 30%].