Multiple Choice
KER commenced operations in 2013.The company has recorded an accrual for warranty in its books during the year ended December 31, 2014 amounting to $100,000.During the year 2014, customers required service from goods sold in 2013 amounting to $60,000.No similar expenditures were made during 2013.KER accrued warranty expenses totalling $100,000 for 2013 and 2014.As a result of the information above, what is the amount of deferred taxes that will appear on the 2014 statement of financial position? Assume a 20% tax rate for both years.
A) A Deferred tax liability of $8,000
B) A Deferred tax asset of $40,000
C) Nil.
D) A Deferred tax asset of $8,000
Correct Answer:
Verified
Correct Answer:
Verified
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