Question: On January 2 2013 Allen Company purchased a machine for

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.

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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