In 2007, Admire Company accrued, for financial statement reporting, estimated lo

Question

In 2007, Admire Company accrued, for financial statement reporting, estimated losses on disposal of unused plant facilities of $1,500,000. The facilities were sold in March 2008 and a $1,500,000 loss was recognized for tax purposes. Also in 2007, Admire paid $100,000 in premiums for a two-year life insurance policy in which the company was the beneficiary. Assuming that the enacted tax rate is 30% in both 2007 and 2008, and that Admire paid $780,000 in income taxes in 2007, the amount reported as net deferred income taxes on Admire's balance sheet at December 31, 2007, should be a

A. $420,000 asset.


B. $360,000 liability.

C. $360,000 asset.

D. $450,000 asset.

Explanation / Answer

A. $420,000 asset.

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