At December 31, DePaul Corporation had a $16 million balance in its deferred tax asset account and a 968 million balance in its deferred tax liability account The balances were due to the following cumulative temporary differences:

1. Estimated warranty expense, 915 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, 950 million: income recorded in the year of the sale: taxable when received equally over the next five years.

4. Rent revenue collected in advance, $25 million: taxable in the year collected: recorded as income when the performance obligation is satisfied in the following year.

Required:

Assuming DePaul will show a single noncurrent net amount in its December 31 balance sheet, indicate that amount and whether it is a net deferred tax asset or liability. The tax rate is 40%.

Answer rating: 100% (QA)

Classification of current and noncurrent deferred tax assets or liability The classification of defe... View the full answer