(This problem should not be attempted until the previous one has been worked.) Refer to the data in the preceding problem.

a Which method of accounting for the lease is Trans Western Airlines Company likely to prefer for tax purposes and why?

b Assuming that the operating-lease method is used on the tax returns and the capitallease method is used on the financial statements, will income taxes payable exceed income tax expense in the first year or vice versa? By how much, if the income tax rate is 40 percent and there are no other timing differences?

c Repeat part b for the fifteenth year.