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At December 31, 2020, Sheffield Corporation had an estimated warranty liability of $82,000 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until paid.) The effective tax rate is 20%.Compute the amount Sheffield should report as a deferred tax asset at December 31, 2020.

Respuesta :

abiolataiwo2015

Answer:

$16,400

Explanation:

Computation of the amount Sheffield should report as a deferred tax asset at December 31, 2020.

Using this formula

Deferred tax asset=Estimated warranty liability*Effective tax rate

Let plug in the formula

Deferred tax asset=$82,000*20%

Deferred tax asset=$16,400

Therefore the amount that Sheffield should report as a deferred tax asset at December 31, 2020 will be $16,400

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