Question

On January 2, 2013, Allen Company purchased a machine for $70,000. This machine has a five-year useful life, a residual value of $10,000, and it is depreciated using the straight-line method for financial statement purposes. For tax purposes, depreciation expense was $25,000 in 2013 and $20,000 in 2014. Allen’s 2014 book income, before income taxes and depreciation expense, was $100,000, and its tax rate was 30%. Allen has no book-tax differences other than due to the machine.

Required:
If Allen had made no estimated tax payments during 2014, what amount of current income tax liability would it report in its December 31, 2014, balance sheet?



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  • CreatedSeptember 10, 2014
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