Deferred tax asset / liability
9. In 2009, Magic Table Inc. decides to add a 36-month warranty on its new product sales. Warranty costs are tax deductible when claims are settled. In its financial statements for 2009, Magic Table Inc incurs:
A. An increase in a deferred tax asset.
B. A decrease in a deferred tax asset.
C. An increase in a deferred tax liability.
D. A decrease in a deferred tax liability
The solution explains the impact of warranty costs on deferred taxes
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