3. At the end of year 6, the tax effects of temporary differences reported in Tortoise Companys...
Question:
3. At the end of year 6, the tax effects of temporary differences reported in Tortoise Company’s year-end financial statements were as follows:
Deferred Tax Assets (Liabilites)
Accelerated tax depreciation ($120,000)
Warranty expense 80,000 NOL carryforward 200,000 Total $160,000 A valuation allowance was not considered necessary. Tortoise anticipates that $40,000 of the deferred tax liability will reverse in year 7, that actual warranty costs will be incurred evenly in year 8 and year 9, and that the NOL carryforward will be used in year 7. On Tortoise’s December 31, year 6 balance sheet, what amount should be reported as a deferred tax asset under U.S. GAAP?
a. $160,000
b. $200,000
c. $240,000
d. $280,000
Step by Step Answer:
Essentials Of Taxation Individuals And Business Entities
ISBN: 233160
1st Edition
Authors: Nellen/Young/Raabe/Maloney