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E19-11B (Three Differences, Classify Deferred Taxes)At December 31, 2014, Rockfellow Corp. had a net deferred tax asset of $50,000. An explanation of the items that compose this balance is as follows. Resulting Balances Temporary Differences in Deferred T

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E19-11B (Three Differences, Classify Deferred Taxes)At December 31, 2014, Rockfellow Corp. had a net deferred tax asset of $50,000. An explanation of the items that compose this balance is as follows.;Resulting Balances;Temporary Differences in Deferred Taxes;1. Accrual, for book purposes, of estimated warranty costs.;Warranty costs will be deducted on the tax return when paid. $ 125,000;2. Excess of tax depreciation over book depreciation (110,000);3. Accrual, for book purposes, of an estimated litigation;settlement expected to be paid in 2016. The loss will;be deducted for tax purposes when paid. 35,000;$ 50,000;In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2015, and $100,000 of the temporary difference due to the warranty costs will reverse in 2015. The tax rate for all years is 40%.;Instructions;Indicate the manner in which deferred taxes should be presented on Rockfellow?s December 31, 2014, balance sheet.

 

Paper#75325 | Written in 18-Jul-2015

Price : $27
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