In 2016, its first year of operations, Rich Corporation reported pretax financial income of $80,000 for...

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In 2016, its first year of operations, Rich Corporation reported pretax financial income of $80,000 for the year ended December 31. Rich depreciates its fixed assets using an accelerated cost recovery method for tax purposes and straight-line depreciation for financial reporting. On assets acquired in 2016, the following are differences between depreciation on the tax return and accounting income during the asset's five-year life: Tax Depreciation in Excess of Book Depreciation $18,000 10,000 2,000 (13,000) (17,000) Enacted Tax Rates 2016 30% 2017 30% 2018 35% 35% 40% 2019 2020 Assuming no other temporary or permanent differences, which of the following combinations of noncurrent deferred tax liability and income taxes payable would be included on Richmond's December 31, 2016 balance sheet? Noncurrent Deferred Income Tax Liability I. $5,400 II. $7,650 III. $7,650 Income Taxes Payable $18,600 $18,600 $29,400 $24,000 IV. $5,400 A) I B) II C) II D) IV In 2016, its first year of operations, Rich Corporation reported pretax financial income of $80,000 for the year ended December 31. Rich depreciates its fixed assets using an accelerated cost recovery method for tax purposes and straight-line depreciation for financial reporting. On assets acquired in 2016, the following are differences between depreciation on the tax return and accounting income during the asset's five-year life: Tax Depreciation in Excess of Book Depreciation $18,000 10,000 2,000 (13,000) (17,000) Enacted Tax Rates 2016 30% 2017 30% 2018 35% 35% 40% 2019 2020 Assuming no other temporary or permanent differences, which of the following combinations of noncurrent deferred tax liability and income taxes payable would be included on Richmond's December 31, 2016 balance sheet? Noncurrent Deferred Income Tax Liability I. $5,400 II. $7,650 III. $7,650 Income Taxes Payable $18,600 $18,600 $29,400 $24,000 IV. $5,400 A) I B) II C) II D) IV

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D IV Explanation Tax on pre tax income before depreciation difference 80000 30 ... View the full answer