South-Western Federal Taxation 2019: Comprehensive, Loose-leaf Version, 42nd + CengageNOWv2, 2 term Printed Access with Access
42nd Edition
ISBN: 9781337813525
Author: Jr William H. Hoffman
Publisher: Cengage Learning
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Financial Accounting
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Purple Corp. reported under GAAP for the year ended 12/31/2024 depreciation expense $45,000 and warranty
expense $25,000. During 2024, $5,000 in warranties were serviced, and the remainder is estimated to be serviced over
the following 4 years. Under the tax code, depreciation for 2024 would be $60,000. Assuming these are the only
differences between GAAP and the tax code, how much would be reported as a deferred tax expense or deferred tax
benefit on the income statement for the year ended 12/31/2024 if the future tax rate will be 30%?
A A deferred tax expense of $4,500
B
A deferred tax benefit of $6,000
C
A deferred tax expense of $1,500
D
A deferred tax benefit of $1,500
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