12.

Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:

SITUATION	1		2
Taxable income	$	40,000	$	80,000
Amounts at year-end:
Future deductible amounts		5,000		10,000
Future taxable amounts		0		5,000
Balances at beginning of year, dr (cr):
Deferred tax asset	$	1,000	$	4,000
Deferred tax liability		0		1,000

The enacted tax rate is 40% for both situations. Required: For each situation determine the:

		situation
		1	2
a	Income tax payable currently
b	Deferred tax asset - balance at year end
c	deferred tax asset change dr or cr for the year
d	deferred tax liability - balance at year end
e	Deferred tax liability change dr or cr for the year
f	income tax expense for the year