Multiple temporary differences; balance sheet presentation
• LO16–4, LO16–5, LO16–6, LO16–8
At December 31, DePaul Corporation had a $16 million balance in its
1. Estimated warranty expense, $15 million: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty).
2.
3. Income from installment sales of properties, $50 million: income recorded in the year of the sale; taxable when received equally over the next five years.
4. Rent revenue collected in advance, $25 million; taxable in the year collected; recorded as income when the performance obligation is satisfied in the following year.
Required:
Assuming DePaul will show a single noncurrent net amount in its December 31 balance sheet, indicate that amount and whether it is a net deferred tax asset or liability. The tax rate is 40%.
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INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
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PRINCIPLES OF TAXATION F/BUS.+INVEST.
Intermediate Accounting
Auditing and Assurance Services (16th Edition)
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