Times-Roman Publishing Company reports the following amounts in its first three years of operation:

($ in 000s) 2016 2017 2018

Pretax accounting income $ 260 $ 230 $ 220

Taxable income 280 250 240

The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when earned. The income tax rate is 40% each year. Times-Roman anticipates profitable operations in the future.

Required:

1. What is the balance sheet account for which a temporary difference is created by this situation?

Earned subscription

Unearned subscription

2.

For each year, indicate the cumulative amount of the temporary difference at year-end. (Enter your answers in thousands.)

3.

Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? (Enter your answers in thousands.)

4. How should the deferred tax amount be classified and reported in the balance sheet?

Current

Noncurrent

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