Question: Ayres Services acquired an asset for 80 million in 2011

Ayres Services acquired an asset for $80 million in 2011. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2011, 2012, 2013, and 2014 are as follows:

Required:

For December 31 of each year, determine
(a) The temporary book–tax difference for the depreciable asset and
(b) The balance to be reported in the deferred tax liability account.


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  • CreatedJuly 05, 2013
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