Reference no: EM132704865

Illini Inc. operates in two independent tax jurisdictions of Bears and Packers. Its has the following information of its deferred tax assets and liabilities:

Bears:Deferred tax asset of $5 millionValuation allowance of $1 millionDeferred tax liability of $14 millionPackers:Deferred tax asset of $18 millionDeferred tax liability of $2 million

Problem 1: Illini files separate tax returns in Bears and Packers. Illini's balance sheet should have the following disclosure of deferred tax assets and liabilities:

Multiple Choice

Option 1: A deferred tax asset of $6 million.

Option 2: A deferred tax liability of $9 million and a deferred tax asset of $20 million.

Option 3: A deferred tax liability of $9 million and a deferred tax asset of $16 million.

Option 4: A deferred tax liability of $10 million and a deferred tax asset of $16 million.