At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account and a $128 million balance in its deferred tax liability account The balances were due to the following cumulative temporary differences Estimated warranty expense, $15 million expense recorded in the year of the sale tax deductible when paid (one year warranty) Depreciation expense, $220 million straight line in the income statement MACRS on the tax return Income from installment sales of properties, $100 million income recorded in the year of the sale taxable when received equally over the next five years Rent revenue collected in advance, $40 million taxable in the year collected recorded as income when the performance obligation is satisfied in the following year Required Assuming DePaul will show a single noncurrent net amount in its December 31 balance sheet, indicate that amount and whether it is a net deferred tax asset or liability The tax rate is 40 Determine the deferred tax amounts to be reported in the December 31 balance sheet The tax rate is 40 (Enter your answers in millions )

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Posted on Jul 14, 2024

At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account and a $128 million balance in its deferred tax

At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account and a $128 million balance in its deferred tax liability account. The balances were due to the following cumulative temporary differences:

Estimated warranty expense, $15 million: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty).
Depreciation expense, $220 million: straight-line in the income statement; MACRS on the tax return.
Income from installment sales of properties, $100 million: income recorded in the year of the sale; taxable when received equally over the next five years.
Rent revenue collected in advance, $40 million; taxable in the year collected; recorded as income when the performance obligation is satisfied in the following year.

Required: Assuming DePaul will show a single noncurrent net amount in its December 31 balance sheet, indicate that amount and whether it is a net deferred tax asset or liability. The tax rate is 40%. Determine the deferred tax amounts to be reported in the December 31 balance sheet. The tax rate is 40%. (Enter your answers in millions.)