Renat Mehali is a junior accountant, working in the same group as you at your public accounting firm, P&A Partners. Renat looks up to you and often turns to you for guidance and mentorship. Renat is studying for her final CPA certification board examinations and is  making connections between her on-the-job training at P&A Partners and her studies. She has admitted to you that shefeels her understanding of corporate income tax reporting is weak and she would like you to help clarify several items for her.
Renat summarized her questions for you in an email, which are as follows:
1. I have reviewed the financial statements of Merilo Corp. for 20X7. I noticed that the company reports a warranty on its SFP. I then looked at the tax return and noticed there is an add-back for warranty expense and a deduction for warranty claims. This is exactly what I learned was an example of a temporary difference that gives rise to deferred taxes. However, Merilo Corp. does not report deferred taxes. I was really puzzled by this so I checked the financials again and saw they were audited. I can’t figure out what I am missing here.
2. I have seen a couple of different deferred tax liability supporting calculation worksheets. I am so confused by the tax rate used. I saw one example where the calculations of the
deferred tax asset and liabilities did not use a future year’s tax rate and I saw another example where a future year’s tax rate was used! The firm sends out summarized tax rates after the government makes big announcements and I always refer to those. Wouldn’t future income taxes always be calculated using future year tax rates?
3. I always thought that long-term liabilities are shown at their present value on the SFP. Yet, when I reviewed the financial statements for S&N corporation, which reports a deferred tax liability of $400,000, I noticed the amount was not discounted. This has really stumped me. Is this an error? Should the $400,000 have been discounted?
4. I was browsing our client files in the shared Google drive and stumbled on Heekah Corp.’s files. Heekah Corp. is a small public company and I guess one of our group members was helping them with their tax calculations because there were some brief notes on this. The calculations set up looked a bit different from what I have seen before, and when I asked Sandra, who sits next to me, she said they were using the shortcut approach. Can you explain to me what this is and the pros and cons of using this method?
5. I remember learning that we normally net the deferred tax balances for financial reporting. Is this always the case? I am almost sure that when I reviewed Norian Corp.’s financial statements I saw a deferred tax asset and a deferred tax liability reported; that means they didn’t net the balances.

Required:
Provide responses to Renat’s questions. Consider the fact that Renat is a junior accountant and therefore your explanations should be geared to her level of understanding.