Temporary Differences,
For tax purposes, the company depreciates the system using the following percentages:
Year | MACRS (%) |
2018 | 20.00% |
2019 | 32.00 |
2020 | 19.20 |
2021 | 11.52 |
2022 | 11.52 |
2023 | 5.76 |
There were no permanent differences during both 2018 and 2019 Income before tax and depreciation is $120,000 in 2018 and $200,000 in 2019. The company is subject to a 40% tax rate.
Required
- a. Prepare a schedule comparing book and tax depreciation and show the deferred tax provision and the cumulative balance of the deferred tax account.
- b. Compute income tax expense and income taxes payable for 2018 and 2019.
- c. What is the balance in the deferred tax account at December 31.2019?
- d. What is the firm’s reported net income for 2018 and 2019?
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Intermediate Accounting (2nd Edition)
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