On January 2, 20X1, Allen Company purchased a machine for $70,000. This machine has a five-year useful

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On January 2, 20X1, Allen Company purchased a machine for $70,000. This machine has a five-year useful life, has a residual value of $10,000, and is depreciated using the straight-line method for financial statement purposes. For tax purposes, depreciation expense was $25,000 in 20X1 and $20,000 in 20X2. Allen’s 20X2 book income, before income taxes and depreciation expense, was $100,000, and its tax rate was 21%. Allen has no book-tax differences other than due to the machine.


Required:
If Allen has paid all its taxes related to 20X1 and prior years, and made no estimated tax payments during 20X2, what amount of current income tax liability would it report in its December 31, 20X2, balance sheet?


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Financial Reporting And Analysis

ISBN: 9781260247848

8th Edition

Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer

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