acc1 7/1/x1 - Purchased depreciable assetCost: 30,000Ignore Salvage ValueUseful Life: 6 yearsTax life: 4 yearsStraight-line depreciation - book & taxPretax Al: $10.000Tax Rate: 40% 20x1, 35% after 20x3-----Assume no additional temporary differences occur and that each yearfollowing 20x4 pretax accounting income is $12,000. Schedule the taxconsequences and record them for 20x5 - 20x7.

Given Informations : 1. Cost of the Depreciable Asset : $ 30,0002. Salvage Value : $ 0 3. Useful…

Answered: Assume no additional temporary…

Assume no additional temporary differences occur and that each year following 20x4 pretax accounting income is $12,000. Schedule the tax consequences and record them for 20x5 - 20x7.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 71BPSB: Depreciation Schedules Dunn Corporation acquired a new depreciable asset for $135,000. The asset has...

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

acc1

7/1/x1 - Purchased depreciable asset
Cost: 30,000
Ignore Salvage Value
Useful Life: 6 years
Tax life: 4 years
Straight-line depreciation - book & tax
Pretax Al: $10.000
Tax Rate: 40% 20x1, 35% after 20x3
-
-
-
-
-
Assume no additional temporary differences occur and that each year
following 20x4 pretax accounting income is $12,000. Schedule the tax
consequences and record them for 20x5 - 20x7.

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Step 1: Step 1 - Explanation of Depreciation as per Book and as per Tax

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Step 2: Step 2 - Explanation & Computation of temporary Difference

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Step 3: Step 3 - Effect of Temporary Difference in Taxes

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Step 4: Step 4 - Records for Year 20x5 - 20x7

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