At December 31, 2010 Cascade had a net deferred tax liability of $45,000. An explanation of items that compose the balance is as follows
Temp differences: Resulting balance in deferred taxes:
- Excess tax depreciation over book depreciation $200,000
- Accrual for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2011. The loss will be deducted on tax return when paid ($50,000)
-Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment $300,0000
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$450,000
In analyzing the temporary difference you find that $30,000 of depreciation temporary difference will reverse in 2011, and 120,000 of temporary difference due to the installment sale will reverse in 2011. The tax rate for all years is 40%
Indicate the manner in which deferred taxes should be presented on Cascades December 31, 2010 balance sheet.