Reference no: EM132868575

Question - SSI uses the future taxes method of accounting for income taxes. The company reports future tax expense for temporary differences arising from property, plant, and equipment; deferred development costs; and warranty liabilities.

As of December 31, 2018, a future income tax liability of $230,000 was reported for property, plant, and equipment; a $100,000 future income tax liability was reported for the deferred development costs; and a future income tax asset of $40,000 was reported related to the warranty liability. These were determined using SSI's 20% tax rate.

During 2019, the following changes occurred with respect to the temporary differences:

Capital cost allowance claimed was $30,000 greater than depreciation expense recorded for accounting.

Deferred development costs capitalized exceeded amortization of deferred development costs by $20,000.

Warranty expense was greater than warranty claims paid by $40,000.

SSI's tax rate is unchanged.

Required -

1: How will the changes impact the future income tax assets, liabilities and expense for the 2019 financial statements?

2: Calculate the revised future income tax asset/liability.