Inspiron Inc. is a technology based education company that provides curriculum and educational services to public, private, and home schools for kindergarten through 12^thgrade. Inspirons 2013 income statements and tax footnotes (partial) are shown on the following two pages.

REQUIRED: use the financial statement information provided on the following pages to answer the following questions.

1. What journal entry does Inspiron make to record its income tax expense in 2013 (do notnet any accounts)?
2. Is management in 2013 OPTIMISTIC or PESSIMISTIC (Circle One) regarding whether or not they will be able to use benefits arising from their DTA? Explain.
3. [5 points] Inspirons statutory tax rate is 35% for all years. Derive the effective tax rate for the year 2013. Would tax planning be classified EFFECTIVE or INEFFECTIVE (Circle One) based on your calculation here? Why?
4. How are the deferred taxes reflected in the 2013 cash flow statement? Inspiron uses the indirect method.

Is the deferred tax consequence a net change in DTA or DTL?	Add to NI or subtract from NI to arrive at CFO for 2013?	Specify the number added to or subtracted from NI on the cash flow statement.

5. Assume cash paid for taxes in 2013 is $6,042K. The Income Tax Payable on the Comparative Balance Sheet of 2013 shows an INCREASE/a DECREASE (Circle One) of $ _____ (Fill in the number here).

6. Refer to the tax footnote. Explain why the item Property and Equipment, net in 2013 would lead to a Deferred Tax Asset.

6a) Your explanation:

6b) Is the asset value of PPE HIGHER or LOWER (Circle One) on Book than on Tax in 2013?

6c) Calculate the originating Book-Tax Difference (BTD) arising from PPE for the year 2013.