Deferred Taxes Manson Company purchased equipment for $1,000,000 on January 1, 2001. The equipment is expected to last for 10 years and have no salvage value at that time. Manson Company uses straight-line depreciation for financial reporting purposes and double-decliningbalance depreciation for tax purposes. Manson has a 30 percent income tax rate and income before depreciation and taxes of $620,000 for 2001.

a. What amount of depreciation expense will Manson Company report in its income statement for 2001? What amount of net income will Manson report for 2001?

b. What amount of income tax will Manson Company pay for 2001?

c. What amount of deferred income taxes will Manson report in its balance sheet at December 31, 2001?