Question: Ovate Inc earns 140 000 in book income before tax and
Ovate, Inc., earns $140,000 in book income before tax and is subject to a 35% marginal Federal income tax rate. Ovate records a single temporary difference. Warranty expenses deducted for book purposes are $8,000 of which only $2,000 are deductible for tax purposes. Determine the amount of Ovate's deferred tax asset or liability.
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