Andy McDowell Co. establishes a $100 million liability at the end of 2014 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2015. Also, at the end of 2014, the company has $50 million of temporary differences due to excess depreciation for tax purposes, $7 million of which will reverse in 2015.
The enacted tax rate for all year is 40%, and the company pays taxes of $64 million on $160 million of taxable income in 2014. McDowell expects to have taxable income in 2015.
Determine the deferred tax asset & deferred tax liability to be reported at the end of 2015.
Select one:
a. 60,000,000; 20,000,000
b. 20,000,000; 40,000,000
c. 40,000,000; 60,000,000
d. 40,000,000; 20,000,000