Wildhorse financial income for Lake Inc. is $342,000, and its taxable income is $114,000 for 2021. Its only temporary difference at the end of the period relates to a $79,800 difference due to excess depreciation for tax purposes. If the tax rate is 20% for all periods, compute the amount of income tax expense to report in 2021. No deferred income taxes existed at the beginning of the year. Income tax expense

An investment readily convertible to a known amount of cash

Explanation:

Cash equivalents are items usually recognized in the balance sheet along with cash (then names Cash and cash equivalent) that are readily or easily convertible to cash at an amount that is measurable.

Examples of cash equivalents include commercial papers, bank certificate of deposit, treasury bills usually with a tenor of 3 months or less etc.

Cash equivalents are assets and help improve the company's liquidity.