Noble Inc Paid $310,000 for Equipment Three Years Ago

Noble Inc. paid $310,000 for equipment three years ago. This year, it sold the equipment for $200,000. Through date of sale, accumulated book depreciation was $93,840 and accumulated tax depreciation was $147,327. Assuming a 21% tax rate, what is the effect of the sale on Noble's deferred tax accounts?

A) $11,232 increase in deferred tax assets
B) $11,232 increase in deferred tax liabilities
C) $11,232 decrease in deferred tax liabilities
D) No effect on deferred tax accounts

Correct Answer:

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