Alexa Inc. purchased equipment two years ago for $160,000 with no residual value. On December 31,...
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Alexa Inc. purchased equipment two years ago for $160,000 with no residual value. On December 31, accumulated depreciation on the equipment using the straight-line method for financial reporting was $40,000. For tax purposes, Alexa uses MACRS depreciation resulting in $113,920 in accumulated depreciation for tax purposes on December 31. Taxable income was $320,000 and the company's tax rate is 25%. a. Determine the GAAP basis of equipment (net) on December 31. Equipment, net (GAAP basis) $ b. Determine the tax basis of equipment on December 31. Equipment, net (tax basis) $ c. Assuming a deferred tax liability balance of $15,680 on January 1, record income tax expense for the year. Alexa Inc. purchased equipment two years ago for $160,000 with no residual value. On December 31, accumulated depreciation on the equipment using the straight-line method for financial reporting was $40,000. For tax purposes, Alexa uses MACRS depreciation resulting in $113,920 in accumulated depreciation for tax purposes on December 31. Taxable income was $320,000 and the company's tax rate is 25%. a. Determine the GAAP basis of equipment (net) on December 31. Equipment, net (GAAP basis) $ b. Determine the tax basis of equipment on December 31. Equipment, net (tax basis) $ c. Assuming a deferred tax liability balance of $15,680 on January 1, record income tax expense for the year.
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a Determine the GAAP basis of equipment net on December 31 GAAP basis of equipment net Original c... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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