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

Situation12Taxable income$40,000$80,000Amounts at year-end: Future deductible amounts 5,000 10,000 Future taxable amounts 0 5,000Balances at beginning of year: Deferred tax asset 1,000 4,000 Deferred tax liability 0 1,000

The enacted state and federal tax rate is 25% for both situations. Determine the change in the deferred tax asset balance for the year.

a.

Situation 1: $1,250

Situation 2: $1,250

b.

Situation 1: $5,000

Situation 2: $10,000

c.

Situation 1: $1,250

Situation 2: $2,500

d.

Situation 1: $0

Situation 2: $0