On January 1, 2012, Deng Company purchased an asset for $100,000. For financial accounting purposes, the asset will be depreciated on a straight-line basis over five years with no residual value at the end of that time. For tax purposes, the asset will be depreciated as follows: 2012, $40,000; 2013, $30,000; 2014, $20,000; 2015, $10,000; and 2016, $0. Assume that the company is subject to a 40% tax rate.
Required
1. What is the amount of deferred tax at December 31, 2012?
2. Does the deferred tax represent an asset or a liability?
3. What is the amount of deferred tax at December 31, 2016?