Deferred Tax (Appendix)

On January 1, 2010, Deng Company purchased an asset for $100,000. For fi nancial accounting purposes, the asset will be depreciated on a straight-line basis over fi ve years with no residual value at the end of that time. For tax purposes, the asset will be depreciated as follows: 2010, $40,000; 2011, $30,000; 2012, $20,000; 2013, $10,000; and 2014, $0. Assume that the company is subject to a 40% tax rate.

Required 1. What is the amount of deferred tax at December 31, 2010?
2. Does the deferred tax represent an asset or a liability?
3. What is the amount of deferred tax at December 31, 2014?AppendixLO1