Depreciation expense 200 million straight-line in the


At December 31, DePaul Corporation had a $22 million balance in its deferred tax asset account and a $90 million balance in its deferred tax liability account. The balances were due to the following cumulative temporary differences:

Estimated warranty expense, $15 million: expense recorded in year of sale; tax-deductible when paid (one-year warranty)
Rent revenue collected in advance, $40 million; taxable in the year collected; recorded as income when earned the following year.

Depreciation Expense, $200 million: straight-line in the income statement; MACRS on the tax return.

Income from installment sales of properties, $25 million: income recorded in year of the sale; taxable when received equally over the next five years (i.e., $5 million per year for next 5 years).

The enacted tax rate is 40% for the entire period in question. Which of the following correctly classifies a component of deferred taxes as presented on the December 31 Balance Sheet?

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Accounting Basics: Depreciation expense 200 million straight-line in the
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