Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the cost is incurred. At December 31, 2013, Lance has a warranty liability of $1 million and taxable income of $75 million. At December 31, 2012, Lance reported a deferred tax asset of $435,000 related to this difference in reporting warranties, its only temporary difference. The enacted tax rate is 40% each year.
I have the answer of
income tax expense = 30,035,000
deferred tax asset = 35,000
income tax payable = 30,000,000
HOWEVER I have no idea how to get these numbers. Can someone please work out the calculations?