Problem: Beacon Corporation recorded the following deferred tax assets and liabilities:
Current deferred tax assets $650,000
Current deferred tax liabilities (400,000)
Noncurrent deferred tax assets 1,000,000
Noncurrent deferred tax liabilities (2,500,000)
Net deferred tax liabilities $(1,250,000)
All of the deferred tax accounts relate to temporary differences that arose as a result of the company's U.S. operations. Which of the following statements describes how Beacon should disclose these accounts on its balance sheet?
1) Beacon reports a net deferred tax liability of $1,250,000 on its balance sheet.
2) Beacon nets the deferred tax assets and the deferred tax liabilities and reports a net deferred tax asset of $1,650,000 and a net deferred tax liability of $2,900,000 on its balance sheet.
3) Beacon can elect to net the current deferred tax accounts and the noncurrent tax accounts and report a net current deferred tax asset of $250,000 and a net deferred tax liability of $1,500,000 on its balance sheet.
4) Beacon is required to net the current deferred tax accounts and the noncurrent deferred tax accounts and report a net current deferred tax asset of $250,000 and a net deferred tax liability of $1,500,000 on its balance sheet.
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