Darrell Corporation reports under IFRS and at December 31, 2014, the company had a net deferred tax liability of $375,000. An explanation of the items that make up this balance follows:
Resulting Balances in
Temporary Differences Deferred Tax Account
1. Excess of accumulated tax depreciation over book depreciation...........$230,000
2. Accrual, for book purposes, of estimated loss contingency from
pending lawsuit that is expected to be settled in 2014. The loss will
be deducted on the tax return when it is paid.
...........................................................................................(80,000)
3. Accrual method (account receivable) used for book purposes
and instalment method used for tax purposes for an isolated
instalment sale of an investment, due in 2015....................................225,000
..........................................................................................$375,000
Instructions
(a) Indicate how deferred tax should be presented on Darrell Corporation's December 31, 2014 statement of financial position.
(b) How would your response to part (a) change if Darrell Corporation followed the ASPE future/deferred income taxes method?