Business, 29.10.2021 14:00 whitethunder05
At December 31, DePaul Corporation had the following cumulative temporary differences associated with its operations:
a. Estimated warranty expense, $24 million temporary difference: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty).
b. Depreciation expense, $104 million temporary difference: straight-line in the income statement; MACRS on the tax return. Income from installment sales of properties, $80 million temporary difference: income recorded in the year of the sale; taxable when received equally over the next five years.
c. Rent revenue collected in advance, $24 million temporary difference; 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 25%.
Answers: 3
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