Financial Tax Dr Warranty Expense Dr Warranty Expense Cr Warranty Payable Cr Cash Dr Warranty Payable Cr Cash Underlying account W/P Underlying Liability TB-BV Neutral Income 100,000 Warranty Expense 60,000 Tax Side, Straight line 3 years Financial, immediate Tax Rate 30% 1 2 3 Neutral 100 100 100 Financial Warranty -60 0 0 Warranty Payable Financial 40 100 100 60 Temp Diff 40 -20 -20 20 Taxable 80 80 20 TR 0.3 0.3 0.3 20 ITP 24 24 24 Dr. ITE 12 TB 0 0 Dr DTA 12 BV 40 20 Cr ITP 24 woo O CTD -40 -20 TR 0.3 0.3 Dr ITE 30 Ending Bal -12 -6 DTA 0 -12 ado Beginning ITP DTE -12 6 CTE 24 24 24 Dr ITE 30 ITE 12 30 30 DTA ITP