Chapter 16, Problem 16.8BE

Temporary and permanent differences; determine deferred tax consequences

• LO16–1, LO16–4

Differences between financial statement and taxable income were as follows:

0	($ in millions)
Pretax accounting income	$300
Permanent difference	(24)
0	276
Temporary difference	(18)
Taxable income	$258

The cumulative temporary difference to date is $40 million (also the future taxable amount). The enacted tax rate is 40%. What is deferred tax asset or liability to be reported in the balance sheet?