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Gordon Co. is a publishing company that specializes in newspapers and...

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Accounting

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Gordon Co. is a publishing company that specializes in newspapers and magazines. For customers that purchase subscriptions, Gordon requires payment in advance, which creates unearned revenue for financial reporting purposes. For tax purposes, subscription revenue is taxable at the earlier of received or earned Gordon has the following book value and tax basis in unearned revenue at the beginning and end of the current year Difference (5) Book Value of Tax Basis of Uneamed Revenge Unearned Revenue ($) 650.000 O 325.000 650,000 325.000 Beginning of year Plus: Cash received Less: Eamed End of year 310, 0000 665.000 310,000 665.000 Assume a 25 tax rate and that Gordon has no other book-tax differences. Based on the above, Gordon has a temporary book-tax difference that increases taxable income by $325,000 relative to book income for the current year a deferred tax benefit (ie, negative deferred tax expense) of $3,750 for the current year a deferred tax asset of $650,000 at the beginning of the year a deferred tax liability of $166,250 at the end of the Year

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