The table below presents selected financial statement data for three companies:

	Company 1	Company 2	Company 3
Depreciable assets at cost:
Beginning of year	$1,170	$4,658	$1,500
End of year	$1,284	$4,161	$1,512
Accumulated depreciation:
Beginning of year	$838	$2,675	$1,460
End of year	$888	$2,878	$1,553
Net income	$35	$250	$55
Depreciation expense	$85	$331	$132
Deferred tax liability relating to depreciable assets:
Beginning of year	$10	$261	$84
End of year	$9	$240	$70
Income tax rate	35%	35%	35%
Depreciation method for financial reporting	straight-line	straight-line	straight-line
Depreciation method for tax reporting	accelerated	accelerated	accelerated

a. Compute the average total depreciable life of assets in use for each firm to the nearest tenth of
a year.
1. Company 1
2. Company 2
3. Company 3
b. Compute the average age to date of depreciable assets to the nearest tenth of a year.
1. Company 1
2. Company 2
3. Company 3
c. Compute the amount of depreciation expense recognized for tax purposes for each firm for the
year using the amount of deferred taxes liability related to depreciation timing differences.
1. Company 1
2. Company 2
3. Company 3
d. Compute the amount of net income for the year for each firm assuming that depreciation
expense for financial reporting equals the amount computed in Requirement c for tax reporting.
1. Company 1
2. Company 2
3. Company 3
e. Compute the amount each company would report for property, plant, and equipment(net) at
the end of the year if it had used accelerated (tax reporting) depreciation instead of straight-line
depreciation.
1. Company 1
2. Company 2
3. Company 3

Answer rating: 100% (QA)

a Company 1Company 2 Company 3 Beginning of the year 1170 4658 150... View the full answer