Coldwell Transportation owns a fleet of 60 semi-trucks. The original cost of the fleet was $9,000,000. Coldwell

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Coldwell Transportation owns a fleet of 60 semi-trucks. The original cost of the fleet was $9,000,000. Coldwell uses straight-line depreciation for the fleet for accounting purposes, and MACRS depreciation for tax purposes. The company had a deferred tax liability balance of $248,000 at the end of fiscal year 2020 related to the fleet.

At the end of fiscal year 2021, the GAAP book value of the fleet was $7,680,000, while the tax book value was $6,980,000. Coldwell’s taxable income for fiscal year 2021 was $950,000. Its tax rate was 40%.


Requirements

1. Calculate the deferred tax liability related to the fleet as of the end of fiscal year 2021.

2. Record the tax accrual for 2021 as of the end of fiscal year 2021.

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Financial Accounting

ISBN: 9780136899037

13th Edition

Authors: C. William Thomas, Wendy M Tietz

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