Refer to Practice 20-3. Assume that before 2015 the company used straight-line depreciation for tax purposes while
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Refer to Practice 20-3. Assume that before 2015 the company used straight-line depreciation for tax purposes while using double-declining-balance depreciation for book purposes. The change to straight-line depreciation in 2015 is made for book purposes; the company continues to use straight-line depreciation for tax purposes. The income tax rate is 40%. (1) Compute the amount of the deferred tax asset or liability that would be included in the December 31, 2014, balance sheet and (2) compute the amount of the deferred tax asset or liability that would be included in the December 31, 2015, balance sheet.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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1 Straightline depreciation 600000 020 years 30000 per year The deferred tax ...View the full answer
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