Ayres Services acquired an asset for $48 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income 2024 $ 500 ($ in millions) 2025 2026 $ 520 Depreciation on the income statement 12 12 $ 535 12 2027 $ 570 12 Depreciation on the tax return Taxable income (48) $ 464 (0) $ 532 (0) $ 547 (0) $ 582 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the nd in the deferred tax liability so
Ayres Services acquired an asset for $48 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income 2024 $ 500 ($ in millions) 2025 2026 $ 520 Depreciation on the income statement 12 12 $ 535 12 2027 $ 570 12 Depreciation on the tax return Taxable income (48) $ 464 (0) $ 532 (0) $ 547 (0) $ 582 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the nd in the deferred tax liability so
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 7P: Deferred Tax Liability: Depreciation At the beginning of 2019, its first year of operations, Cooke...
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