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Net deferred tax liability is right, but I have no idea what the number should be or how I should find it. At December 31,
Net deferred tax liability is right, but I have no idea what the number should be or how I should find it.
At December 31, DePaul Corporation had the following cumulative temporary differences associated with its operations: 1. Estimated warranty expense, $32 million temporary difference: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty). 2. Depreciation expense, $112 million temporary difference: straight-line in the income statement; MACRS on the tax return. 3. Income from installment sales of properties, $120 million temporary difference: income recorded in the year of the sale; taxable when received equally over the next five years. 4. Rent revenue collected in advance, $32 million temporary difference; 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 25%. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).) Net deferred tax liability millionStep by Step Solution
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