oman Pubi ing ompany reports the following amounts in its first three years of opera ($ in thousands) Pretax accounting income Taxable income 2024 $ 350 390 2025 $ 360 2026 $ 320 340 360 he difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine bscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when the erformance obligation is satisfied. The income tax rate is 25% each year. Times-Roman anticipates profitable operations in the future equired: 1. What is the balance sheet account that gives rise to a temporary difference in this situation? 2. For each year, indicate the cumulative amount of the temporary difference at year-end. 3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability?

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue autho…