Taxable Income €500,000 330,000 400,000 1. Year 2018 2019 2020 2. On January 2, 2018, heavy equipment costing €600,000 was purchased. The equipment had a life of 5 years and no residual value. The straight-line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below: Tax Depreciation 2020 €90,000 2018 €198,000 2019 €270,000 2021 €42,000 Total €600,000 3. On January 2, 2019, €240,000 was collected in advance for rental of a building for a three- year period. The entire €240,000 was reported as taxable income in 2019, but €160,000 of the €240,000 was reported as unearned revenue at December 31, 2019 for book purposes. 4. The enacted tax rates are 40% for all years.

Taxable Income €500,000 330,000 400,000 1. Year 2018 2019 2020 2. On January 2, 2018, heavy equipment costing €600,000 was purchased. The equipment had a life of 5 years and no residual value. The straight-line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below: Tax Depreciation 2020 €90,000 2018 €198,000 2019 €270,000 2021 €42,000 Total €600,000 3. On January 2, 2019, €240,000 was collected in advance for rental of a building for a three- year period. The entire €240,000 was reported as taxable income in 2019, but €160,000 of the €240,000 was reported as unearned revenue at December 31, 2019 for book purposes. 4. The enacted tax rates are 40% for all years.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.2P

See similar textbooks

Similar questions

Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year. Turnip uses differing depreciation methods for financial reporting and income tax purposes. The depreciation expense during the current year for financial reporting is 1,000 and for income tax purposes is 2,000. Turnip is subject to a 30% enacted future tax rate. Prepare a schedule to compute Turnips (a) ending future taxable amount, (b) ending deferred tax liability, and (c) change in deferred tax liability (deferred tax expense) for the current year.
AN entity acquired plant and equipment for $1 million on 1st January 20X9. The asset is depreciated at 25% a year on straight-line method and tax legislation permits to depreciate the assets at 30% a year for tax purpose. Tax rate is 30%. Calculate any DTL that might arise on the plant and equipment at 31/12/X9. a. $90 000 b. $15 000 c. $75 000 d. $300 000
Holden Company reported the following net income before taxes anddepreciation for the years indicated.2019: $100,000 2020: $70,000 2021: $120,000The Company purchased assets costing $120,000 on January 1, 2019. Theassets have a three year useful life and no salvage value. For tax purposesthe Company used an acceptable accelerated depreciation method thatresulted in depreciation expense of $55,000; $40,000; and $25,000 for thethree years respectively. For financial reporting purposes the straight-linemethod was used. A 20% tax rate was in effect for the three years.Instructions:Prepare the necessary calculations and make the end of year entries for theHolden Company for the years 2019, 2020, 2021.
Question oneAbani Limited acquired a machinery on 1/1/2020 for K200,000. The company depreciates the machinery at 25% per annum on cost. The company`s tax rate is 35% and that the year end is 31/12.The company is entitled to the following capital allowances:Year K2020 100,0002021 100 0002022 02023 0The company also had the following profits before tax but after depreciation as follows:Year K2020 125,0002021 140,0002022 175.0002023 192,000You are required to prepare the profit and Loss account extracts for all the yearsa) Ignore Deferred tax b) Include deferred tax c) Statement of Financial position (extracts) for the years 2020 to 2023
Subject:accounting Green Bank Corporation claimed $300,000 in Sec.179 epxense and $200000 in bonus depreciation in 2020 and the following is the remaining basis for each asset purchased in 2020 after applying Sec 179 and bonus depreciation: Desks and chairs purchasd on March remaining basis 150,000 and Computers purchased in April remaining basis 250000What is the TOTAL depreciation expense for the taxpayer in 2020?
TB MC Qu. 08-117 An asset's book value... An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:
4.2. The following information relates to Machine Productive at 31 December 2020: Historic Carrying amount Fair value less cost to sell Value in Use Tax Base Remaining useful life R 400 000 340 000 320 000 300 000 4 years One year later the fair value less cost to sell was R320 000 and the value in use was R380 000. Machine Productive is depreciated on a straight-line basis. Assume that the tax rate is 28%, and a capital allowance of R100 000 was granted in 2021 REQUIRED: Prepare the journal entries relating to the reversal of the impairment loss in the 2021 year of assessment
Deferred tax liability $18,000Deferred tax asset 15,000Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items:Depreciation expense – plant $7,000Doubtful debts expense 3,000Long-service leave expense 4,000For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:Tax depreciation – plant $8,000Bad debts written off 2,000Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies. What are the balances of the deferred tax liability and deferred tax asset at 30 June 2020?
A long-term asset was purchased at the beginning of 2021. It has a 2-year life and no salvage value. The company uses straight-line method for financial purpose and accelerated depreciation method for tax purpose. For tax purpose, 2021’s depreciation is $480 and 2022’s depreciation is $270. Please compute straight-line depreciation for financial purpose on your own. It should be ($480 + $270) and divided by 2. Assuming taxable income for 2021 is $477,000, the enacted tax rate is 20% for all years, this is the only difference between pretax financial income and taxable income, and there were no deferred taxes at the beginning of 2021. What amount of income tax expense should the company report at the end of 2021?
Assume that Sivart Corporation has 2022 taxable income of $1,750,000 for purposes of computing the §179 expense and acquired several assets during the year. Assume the delivery truck does not qualify for bonus depreciation. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Placed in Service Basis Machinery June 12 $ 1,440,000 Computer equipment February 10 70,000 Delivery Truck—used August 21 93,000 Furniture April 2 310,000 Total $ 1,913,000 a. What is the maximum amount of §179 expense Sivart may deduct for 2022?
Subject:- Account On 1 January 2019 the carrying value of equipment was R19 720 (cost price, R25 670 and accumulated depreciation, R5 950). On 1 January 2019 equipment costing R5 670 was purchased (not included in the R25 670). The depreciation policy is to provide for depreciation, on all equipment held at year-end, at 25% per annum on the diminishing-balance method. Prepare the PPE note..
Depreciation for Financial Statements and Income Tax Purposes Dinkle Company purchased equipment for $50,000. The equipment has an estimated residual value of $5,000 and an expected useful life of 10 years. Dinkle uses straight-line depreciation for its financial statements. Required: What is the difference between the company's income before taxes reported on its financial statements and the taxable income reported on its tax return in each of the first 2 years of the asset's life if the asset was purchased on January 2, 2016, and its MACRS life is 5 years?