Ayres Services acquired an asset for $112 million in 2021. The asset is depreciated for financial...
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Ayres Services acquired an asset for $112 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2022 $370 28 20) 2021 2023 2024 $420 Pretax accounting Income Depreciation on the incone statement Depreciation on the tax return Taxable income $350 28 (53) $385 28 28 (19) (11) $437 $325 $369 $394 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal place (i.e., 5,500,000 should be entered as 5.50).) Answer is not complete. End of 2022 End of 2024 End of Beginning of 2021 End of 2021 2023 $ (25.00) O 0.00 O 17.00 Cumulative Temporary Difference Deferred Tax Liability 0.00 0.00 is 21.00 14.00 Os 7.00 0 5 0.00 O Ayres Services acquired an asset for $112 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2022 $370 28 20) 2021 2023 2024 $420 Pretax accounting Income Depreciation on the incone statement Depreciation on the tax return Taxable income $350 28 (53) $385 28 28 (19) (11) $437 $325 $369 $394 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal place (i.e., 5,500,000 should be entered as 5.50).) Answer is not complete. End of 2022 End of 2024 End of Beginning of 2021 End of 2021 2023 $ (25.00) O 0.00 O 17.00 Cumulative Temporary Difference Deferred Tax Liability 0.00 0.00 is 21.00 14.00 Os 7.00 0 5 0.00 O
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Related Book For
Intermediate Accounting
ISBN: 978-0078025839
9th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson , Wayne Thomas
Posted Date:
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