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Brown, Inc. earns $280,000 in book income before tax and is subject to a 26% Federal Income Tax rate. Brown records a single temporary difference:
Brown, Inc. earns $280,000 in book income before tax and is subject to a 26% Federal Income Tax rate. Brown records a single temporary difference: Warranty expenses deducted for book purposes are $12,000, of which none of it is deductible for tax purposes. There has been no book-tax differences in prior years.
*** Determine Brown's deferred tax asset or liability. Show calculations.
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