Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 20082010 as follows: 2008

Question:

Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2008–2010 as follows:
2008 .....$210,000
2009 .......240,000
2010 .......280,000
When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2008, at a cost of $88,000. The equipment is expected to last three years and have an $8,000 . Wyhowskiuses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $50,000 in 2008, $20,000 in 2009, and $10,000 in 2010. Wyhowski’s tax rate is 35%.

Required
1. How much did Wyhowski pay in income tax each year?
2. How much income tax expense did Wyhowski record each year?
3. What is the balance in the Deferred Income Tax account at the end of 2008, 2009, and 2010?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...