Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: 2024 $ 330 Cumulative Temporary Difference Deferred Tax Liability 20 (25) $325 ($ in millions) 2025 $ 350 20 (33) $ 337 $ 370 2026 $365 20 (15) For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). 2027 $ 400 20 (7) $413 Beginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027
Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: 2024 $ 330 Cumulative Temporary Difference Deferred Tax Liability 20 (25) $325 ($ in millions) 2025 $ 350 20 (33) $ 337 $ 370 2026 $365 20 (15) For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). 2027 $ 400 20 (7) $413 Beginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 5MC: At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial...
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![Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on
a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%.
Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows:
Pretax accounting income
Depreciation on the income statement
Depreciation on the tax return
Taxable income
Required:
2024
$ 330
20
(25)
$325
Cumulative Temporary Difference
Deferred Tax Liability
($ in millions)
2025
$350
20
(33)
$337
2026
$365
20
(15)
$370 $413
Beginning of 2024
2027
$ 400
For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the
balance to be reported in the deferred tax liability account.
Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e.,
5,500,000 should be entered as 5.50).
20
(7)
End of 2024
End of 2025
End of 2026
End of 2027](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2375c06c-c2fd-4086-be02-4d7395994926%2F7f8f20ef-e10b-4d17-9722-5d9b89a01c49%2F2ras8q_processed.png&w=3840&q=75)
Transcribed Image Text:Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on
a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%.
Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows:
Pretax accounting income
Depreciation on the income statement
Depreciation on the tax return
Taxable income
Required:
2024
$ 330
20
(25)
$325
Cumulative Temporary Difference
Deferred Tax Liability
($ in millions)
2025
$350
20
(33)
$337
2026
$365
20
(15)
$370 $413
Beginning of 2024
2027
$ 400
For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the
balance to be reported in the deferred tax liability account.
Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e.,
5,500,000 should be entered as 5.50).
20
(7)
End of 2024
End of 2025
End of 2026
End of 2027
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