The following information has been provided for Relink Corporation for 20X2-20X5: Capital asset additions 20X2 $1,000,000...

 

Transcribed Image Text:

The following information has been provided for Relink Corporation for 20X2-20X5: Capital asset additions 20X2 $1,000,000 20X3 20X4 20X5 $0 $2,000,000 $0 Depreciation expense 100,000 100,000 300,000 300,000 Capital cost allowance 200,000 160,000 528,000 422,400 Development costs incurred 90,000 100,000 120,000 50,000 Development costs amortized 0 18,000 38,000 50,000 Tax rate 40% 37% 37% 35% Required: 1. What is the tax basis of the capital assets in each year? 2. What is the tax basis of the development costs in each year? 3. What is the accounting basis of the capital assets in each year? 4. What is the accounting basis of the development costs in each year? 5. What is the deferred tax balance in each year? 6. Is the deferred tax balance in each year an asset or a liability? The following information has been provided for Relink Corporation for 20X2-20X5: Capital asset additions 20X2 $1,000,000 20X3 20X4 20X5 $0 $2,000,000 $0 Depreciation expense 100,000 100,000 300,000 300,000 Capital cost allowance 200,000 160,000 528,000 422,400 Development costs incurred 90,000 100,000 120,000 50,000 Development costs amortized 0 18,000 38,000 50,000 Tax rate 40% 37% 37% 35% Required: 1. What is the tax basis of the capital assets in each year? 2. What is the tax basis of the development costs in each year? 3. What is the accounting basis of the capital assets in each year? 4. What is the accounting basis of the development costs in each year? 5. What is the deferred tax balance in each year? 6. Is the deferred tax balance in each year an asset or a liability?

Answer rating: 100% (QA)

1 Tax basis of capital assets 20X2 1000000 50000 950000 20X3 950000 2000000 16000... View the full answer