Coldwell Transportation owns a fleet of 60 semi-trucks. The original cost of the fleet was $9,000,000. Coldwell
Question:
Coldwell Transportation owns a fleet of 60 semi-trucks. The original cost of the fleet was $9,000,000. Coldwell uses straight-line depreciation for the fleet for accounting purposes, and MACRS depreciation for tax purposes. The company had a deferred tax liability balance of $248,000 at the end of fiscal year 2017 related to the fleet.
At the end of fiscal year 2018, the GAAP book value of the fleet was $7,680,000, while the tax book value was $6,980,000. Coldwell’s taxable income for fiscal year 2018 was $950,000. Its tax rate was 40%.
Requirements
1. Calculate the deferred tax liability related to the fleet as of the end of fiscal year 2018.
2. Record the tax accrual for 2018 as of the end of fiscal year 2018.
GAAPGenerally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
Step by Step Answer:
Req 1 GAAP Book value 7680000 Tax Book value 6980000 Depreciation ...View the full answer
Financial Accounting
ISBN: 978-0134725987
12th edition
Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
