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Reporting Tax Amounts on the Balance Sheet The following items create deferred tax assets and deferred tax liabilities for a company at December 31. 1.
Reporting Tax Amounts on the Balance Sheet The following items create deferred tax assets and deferred tax liabilities for a company at December 31. 1. Prepaid operating expenses of $40,000 are tax deductible when paid. 2. Excess tax depreciation (MACRS) over GAAP depreciation (straight-line) is $35,200. 3. Warranty liability of $12,800 is tax deductible when incurred. 4. Installment sales of $128,000 are recorded on an accrual basis for book purposes and taxed when collected. 5. Taxable income is $512,000 and the tax rate is 25%. Show how all tax-related items would be reported on the December 31 balance sheet
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