[wjxhahaha]

Hi guys…I posted the same question in the study group, the reason why I’m posting this a second time is that so far none of my question has been answered in the study group at all….(out of 3), so I decided to take this one out to see if I can get any help.

does anyone know why these items are beling classified a current liabilities in this question?

Warranty liability

Deferred compensation liability

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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:

12/31/Year 1 Future taxable

(deductible) amounts

Book basis Year 2 Year 3 Year 4 Year 5

over (under)

tax basis

Warranty liability (20) (20) 0 0 0

Deferred compensation liability (15) 0 (5) 0 (5)

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The question asks for net current defered tax asset assuming enacted rate 30%.

The answer says (20+15)*0.3

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why???

Any help please!!!

[Skynet]

Deferred Income is when your wife keeps your pay check and decides when and how much she'll give you if any : )

[Jdn9201]

The reason why 35 is current DTL is because that's the amount that is expected to turn within the next year,

BEC - 88 8/29/15
REG - 82 11/14/15
AUD - 83 1/8/16
FAR - 80 2/29/16

[wjxhahaha]

@jdn9201
Thanks for helping! But I remember becker says if item itself is a noncurrent/current item by nature, then the derived DTA or DTL is noncurrent/current. Only those items that don't have a mama need to consider reversal timing

[wjxhahaha]

@skynet
Thanks for dropping by! I'm just very confused on why these items are classifed as current DTA. Thanks a lot!

[Author]

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