Item
Classification on the Balance Sheet
Deferred Tax Associated with Item
Excess of warranty expense over warranty deductions
Current
$65,000 Asset
Accelerated depreciation for tax purposes
Non-current
$75,000 Liability
Installment sales receivable
Current
$35,000 Liability
Contingent liability
Current
$25,000 Asset
Assuming it meets the conditions to net assets and liabilities, what amount will the company report for the net current and non-current deferred taxes?
A) net current deferred tax liability $55,000; non-current deferred tax liability $75,000
B) net current deferred tax asset $55,000; non-current deferred tax liability $75,000
C) net current deferred tax asset $90,000; net non-current deferred tax liability 110,000
D) net current deferred tax liability $35,000; net non-current deferred tax asset $75,000
Answer: B
Explanation: B) Current: 65,000 + 25,000 – 35,000