ACC 306 Week 3 Assignment E 16-24, E 16-25, E 17-10, E 17-19, P 16-7, P 17-16

May 4th, 2015
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ACC 306 Week 3 Assignment E 16-24, E 16-25, E 17-10, E 17-19, P 16-7, P 17-16

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E 1624 - DePaul Corporation - Balance sheet classification LO4 LO5 LO6 LO8At December 31, DePaul Corporation had a $16 million balance in its deferred tax asset account and a $68 million balance in its deferred tax liability account. The balances were due to the following cumulative temporary differences: 1. Estimated warranty expense, $15 million: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty). 2.Depreciation expense, $120 million: straight-line in the income statement; MACRS on the tax return. 3.Income from installment sales of properties, $50 million: income recorded in the year of the sale; taxable when received equally over the next five years. 4.Bad debt expense, $25 million: allowance method for accounting; direct write-off for tax purposes.Required:Show how any deferred tax amounts should be classified and reported in the December 31 balance sheet. The tax rate is 40%.Exercise 16-24($ in millions)FutureDeferred ClassificationTaxableTax (Asset) Related Balance current-C (Deductible)TaxLiabilitySheet Accountnoncurrent-NCAmountsRateC NCLiability warranty expenseC(15)x 40%(6)Depreciable assetsNC120x 40%48Receivable installment sales C10x 40%4Receivable installment sales NC40x 40%16Allowance uncollectible accountsC(25)x 40%(10) Net current liability (asset)(12)Net noncurrent liability (asset)64Curre

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