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 $ 36,000 $ 76,000 Amounts at year-end: Future deductible amounts 4,600 11,400 Future taxable amounts 0 4,600 Balances at beginning of year, debit (credit): Deferred tax asset $ 1,000 $ 3,990 Deferred tax liability 0 1,000 The enacted tax rate is 35% for both situations.