Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2017.
1. Indigo Co. has developed the following schedule of future taxable and deductible amounts.
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
| Taxable amounts |
|
$200 |
|
$200 |
|
$200 |
|
$200 |
|
|
$200 |
| Deductible amount |
|
- |
|
- |
|
- |
|
(1,700 |
) |
|
|
2. Sweet Co. has the following schedule of future taxable and deductible amounts.
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
| Taxable amounts |
|
$200 |
|
$200 |
|
$200 |
|
|
$200 |
| Deductible amount |
|
- |
|
- |
|
(1,800 |
) |
|
- |
Both Indigo Co. and Sweet Co. have taxable income of $4,300 in 2017 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2017 are 30% for 2017-2020 and 35% for years thereafter. All of the underlying temporary differences relate to noncurrent assets and liabilities.
1. Compute the net amount of deferred income taxes to be reported at the end of 2017, and indicate how it should be classified on the balance sheet for situation one.
Deferred income taxes to be reported at the end of 2017 in Indigo co.=
2. Compute the net amount of deferred income taxes to be reported at the end of 2017, and indicate how it should be classified on the balance sheet for situation two.
Deferred income taxes to be reported at the end of 2017 in Sweet co. $