Rom Corp. began business in Year 1 and reported taxable
income of $50,000 on its Year 1 tax return. Rom's
enacted tax rate is 30% for Year 1 and future years. All
differences except for equipment relate to current
balance sheet accounts. The following is a schedule of
Rom's December 31, Year 1, temporary differences in
thousands of dollars:
Equipment 10
Warranty liability (20)
Deferred compensation liability (15)
Installment receivables 30
What amount should Rom report as current deferred tax asset in its December 31, Year 1 balance sheet under U.S. GAAP?
My question is why is deferred compensation liability a DTA in this case? I know Warranty is a DTA because they are deductible and the installment is DTL because they are taxable. Thanks!
.