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E19-9B (L04) (Three Differences, Classify Deferred Taxes) At December 31, 2016, Rockfellow Corp, had a net deferred tax asset of $50,000. An explanation of the items that compose this balance is as follows. Resulting Balances Temporary Differences in Deferred Takes 1. Accrual for book purposes of estimated warranty cost Warranty costs will be deducted on the tax retum when paid $ 125,000 2. Excess of tax depreciation over book depreciation (110,000) 3. Accrual, for book purposes of an estimated litigation settlement expected to be paid in 2017. The loss will be deducted for tax purpones when paida 35.100 550.000 In analyzing the temporary differences, you find that $30,000 of the depreciation temporary difference will reverse in 2017, and $100,000 of the temporary difference due to the warranty costs will reverse in 2017. The tax rate for all year is 10%