At December 31, 2019, Suffolk plc had an estimated warranty liability of 105,000 for accounting purposes and

Question:

At December 31, 2019, Suffolk plc had an estimated warranty liability of £105,000 for accounting purposes and £0 for tax purposes. (The warranty costs are not deductible until paid.) The effective tax rate is 40%. Compute the amount Suffolk should report as a deferred tax asset at December 31, 2019, assuming sufficient taxable income in future years.