In Figland Company's first year of operations (2017), the company had pre-tax book income of $500,000 and taxable income of $800,000. Figland's only temporary difference is for accrued product warranty costs, which are expected to be paid as follows:
2018..........................$100,000
2019...........................$200,00
The enacted income tax rate is 35%. Figland believes there is a high likelihood that one-third of the tax benefit associated with the future deductible amounts will not be realized.
Required:
Compute the amount of deferred tax asset and related valuation allowance that would be reported in Figland's 2017 tax note.