Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts...
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Accounting
Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:
Situation
1
2
Taxable income
$40,000
$80,000
Amounts at year-end:
Future deductible amounts
5,000
10,000
Future taxable amounts
0
5,000
Balances at beginning of year:
Deferred tax asset
$1,000
$4,000
Deferred tax liability
0
1,000
The enacted tax rate is 40% for both situations.
Determine the deferred tax asset balance at year-end.
a.
Situation 1
Situation 2
$3,000
$8,000
b.
Situation 1
Situation 2
$5,000
$10,000
c.
Situation 1
Situation 2
$1,000
$3,000
d.
Situation 1
Situation 2
$2,000
$4,000
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