1. Make an adjustment entry to record income tax expense, income tax payable and deferred income tax for Netflix for 2016. Consider net deferred tax assets for the purpose of the entry. The company already paid $83,500 to tax authority for 2016.

2. Suppose, Netflix records deferred tax liabilities of $93,760 at a tax rate of 35%. The balance sheet reports net property, plant and equipment, of $2,500,395. Compute the tax basis for these assets, or, in other words, what is value of assets under tax accounting at the end of 2016?

[Hint: recall that the difference between the assets net book value under GAAP accounting and the tax basis, i.e., the value of assets under tax accounting, is the timing difference and that deferred taxes are recorded as timing difference tax rate.]

3. Netflix reports a significant deferred tax asset ($188,458) relating to stock-based compensation for 2016. Explain why this gives rise to a deferred tax asset.

Part B:

Cranberry Chemical recorded a pretax restructuring charge of $1,916 million in 2017. By year-end December 31, 2017, the company had paid only $216 million of cash related to the restructuring charges.

How did the restructuring charge of $1,916 million affect income before taxes? How did this charge affect deferred taxes on the balance sheet? Assume a tax rate of 35%.

Part A: Deferred tax assets (liabilities) were as follows (in thousands): Part A: Deferred tax assets (liabilities) were as follows (in thousands)