Question

Sandhill Corporation has temporary differences at December 31, 2020, that result in the following deferred taxes.

Answer 1

Answer: Please refer to Explanation

Explanation:

As per the US GAAP and IFRS, Deferred Tax Liabilities and Assets are not to be reported as Current Assets or Liabilities but rather as Non Current items.

Assets

Warranty Liability $57,400

Litigation Accruals $ 27,800

Total Deferred Tax Assets $85,200

Liabilities

Revenue Recognition $93,600

Depreciation $38,000

Total Deferred Tax Liabilities $131,600

Total Net Deferred Tax Liability $46,400

Total Net Deferred Tax Liability calculation

= $131,600 - $85,200

= $46,400

The above is how these balances would be presented in Sandhill’s December 31, 2020 balance sheet.