Question
At December 31, 2017, Vermont Industries reported three temporary differences between accounting and taxable income. Vermont had $25,000 of future deductible amounts resulting from accrued
At December 31, 2017, Vermont Industries reported three temporary differences between accounting and taxable income. Vermont had $25,000 of future deductible amounts resulting from accrued warranty liabilities. Vermont offers customers a one year warranty on its products. Vermont had $55,000 in future taxable amounts associated with depreciation on property and equipment, and $15,000 in future taxable amounts associated with prepaid expenses that expire in 2018. No temporary differences existed at December 31, 2016. The income tax rate is 40%. Vermont would report the following amount(s) related to deferred taxes on its year end December 31, 2017 balance sheet: A) $18,000 net noncurrent deferred tax liability. B) $4,000 current deferred tax asset and $22,000 noncurrent deferred tax liability. C) $10,000 noncurrent deferred tax asset and $28,000 noncurrent deferred tax liability. D) $4,000 noncurrent deferred tax asset and $22,000 noncurrent deferred tax liability.
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