In Year 2, Rand, Inc. reported for financial statement purposes the following items, which were not included in taxable income:

Installment sale gain to be collected equally in Years 3 through 5	$1,500,000
Estimated future warranty costs to be paid equally in Years 3 through 5	2,100,000

There were no temporary differences in prior years. Rand's enacted tax rates are 30% for Year 2 and 25% for Years 3 through 5. In its December 31, Year 2, balance sheet, what amount should Rand report as a deferred tax asset (liability)?

A.

$150,000 deferred tax asset.

B.

$150,000 deferred tax liability.

C.

$180,000 deferred tax asset.

D.

$180,000 deferred tax liability

Answer rating: 100% (QA)

Explanation The warranty temporary difference resul... View the full answer