81. CPA-00846

For calendar year 1989, Clark Corp. reported depreciation of $300,000 in its income statement. On its 1989 income tax return, Clark reported depreciation of $500,000. Clark's income statement also included $50,000 accrued warranty expense that will be deducted for tax purposes when paid. Clark elected early application of FASB Statement No. 109, Accounting for Income Taxes, in its financial statements for the year ended December 31, 1989. Clark's enacted tax rates are 30% for 1989 and 1990, and 25% for 1991 and 1992. The depreciation difference and warranty expense will reverse over the next three years as follows:

1990     $ 80,000                                                                      $10,000

1991       70,000                                                                 15,000

1992         50,000                                                                         25,000

  total        $200,000        &nbs p;         &nbs p;         &nbs p;         &nbs p;         &nbs p;         &nbs p;  $50,000

These were Clark's only temporary differences. In Clark's 1989 income statement, the deferred portion of its provision for income taxes should b e:

a. $67,000

b. $45,000

c. $41,000

d. $37,500