You also notice that the Company has a Prepaid Expense account (asset) and that there is no book/tax difference reflected in the return (tax follows book treatment) and when you ask for additional information about the account you find out the following balance information: 12/31/2015 $300,000 (Casualty Insurance $175,000 & Advertising Services $125,000) 12/31/2016 $340,000 (Casualty Insurance $175,000 & Advertising Services $165,000) 12/31/2017 $410,000 (Casualty Insurance $200,000 & Advertising Services $210,000) 12/31/2018 $430,000 (Casualty Insurance $200,000 & Advertising Services $230,000) 12/31/2019 $445,000 (Casualty Insurance $215,000 & Advertising Services $230,000) 12/31/2020 $375,000 (Casualty Insurance $215,000 & Advertising Services $160,000) The Company expects to utilize the advertising services in May and June of the following year and the casualty insurance premium relates to a policy for the twelve months beginning on January 1 of the following year. 1. Is the Company on a correct method with respect to the Prepaid Expense account? 2. If the Company wants to take advantage of a tax deferral opportunity, what action should be taken by the Company? 3. If necessary, calculate the Section 481(a) adjustment and spread period, if any. You also notice that the Company has a Prepaid Expense account (asset) and that there is no book/tax difference reflected in the return (tax follows book treatment) and when you ask for additional information about the account you find out the following balance information: 12/31/2015 $300,000 (Casualty Insurance $175,000 & Advertising Services $125,000) 12/31/2016 $340,000 (Casualty Insurance $175,000 & Advertising Services $165,000) 12/31/2017 $410,000 (Casualty Insurance $200,000 & Advertising Services $210,000) 12/31/2018 $430,000 (Casualty Insurance $200,000 & Advertising Services $230,000) 12/31/2019 $445,000 (Casualty Insurance $215,000 & Advertising Services $230,000) 12/31/2020 $375,000 (Casualty Insurance $215,000 & Advertising Services $160,000) The Company expects to utilize the advertising services in May and June of the following year and the casualty insurance premium relates to a policy for the twelve months beginning on January 1 of the following year. 1. Is the Company on a correct method with respect to the Prepaid Expense account? 2. If the Company wants to take advantage of a tax deferral opportunity, what action should be taken by the Company? 3. If necessary, calculate the Section 481(a) adjustment and spread period, if any