KER Commenced Operations in 2013

question 111

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) Nil.
• B) A Deferred tax asset of $8,000
• C) A Deferred tax liability of $8,000
• D) A Deferred tax asset of $40,000

---

Definitions:

Abolished Slavery

The action or legal process of formally ending the practice or institution of slavery, where individuals are owned by others as property.

Freed Slaves

Individuals who were emancipated from slavery, often after legal acts or at the conclusion of conflicts such as the Civil War.

Racially Integrated

The process or state of combining people of different races in a community or institution.

Public Schools

Educational institutions funded and run by the government, providing free education to students as part of the public education system.