Question

Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2020. 1. Sunland Co. has developed the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 2025 Taxable amounts $200 $200 $200 $200 $200 Deductible amount — — — (1,400 ) 2. Coronado Co. has the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 Taxable amounts $200 $200 $200 $200 Deductible amount — — (2,500 ) — Both Sunland Co. and Coronado Co. have taxable income of $3,800 in 2020 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2020 are 30% for 2020–2023 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 2020, and indicate how it should be classified on the balance sheet for situation one.

Deferred income taxes to be reported at the end of 2020 in Sunland Co.

$

SUNLAND CO. Balance Sheet (Partial)                                                           December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsNoncurrent LiabilitiesOther AssetsProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
					$

2. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation two.

Deferred income taxes to be reported at the end of 2020 in Coronado co.

$

CORONADO CO. Balance Sheet                                                           December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsNoncurrent LiabilitiesOther AssetsProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
					$

Answer 1