net income before taxes and depreciation
Holden Company reported the following net income before taxes and
2019: $100,000 2020: $70,000 2021: $120,000
The Company purchased assets costing $120,000 on January 1, 2019. The
assets have a three year useful life and no salvage value. For tax purposes
the Company used an acceptable accelerated depreciation method that
resulted in depreciation expense of $55,000; $40,000; and $25,000 for the
three years respectively. For financial reporting purposes the straight-line
method was used. A 20% tax rate was in effect for the three years.
Instructions:
Prepare the necessary calculations and make the end of year entries for the
Holden Company for the years 2019, 2020, 2021.
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