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.

Temporary Differences Resulting Balances 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 Rockfellows December 31, 2014, balance sheet.

PLEASE SHOW ALL WORK AND CALCULATIONS. PLEASE SHOW THE CORRECT BALANCE SHEET.