Cell Image Corp. reported a deferred tax liability of $120,000 in 20X5, caused by equipment with a

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Cell Image Corp. reported a deferred tax liability of $120,000 in 20X5, caused by equipment with a UCC of $1,500,000 and net book value of $1,980,000. The tax rate was 25%. In 20X6, accounting earnings were $350,000, depreciation expense was $150,000, and CCA was $200,000. The tax rate is 35%.


Required:
1. Calculate tax payable.
2. Calculate the tax basis of the equipment.
3. Calculate the accounting basis of the equipment.
4. Calculate the amount of the deferred income tax adjustment.
5. Calculate the amount of the adjustment in requirement 4 that was caused by the (a) change in the tax rate and (b) new temporary difference.
6. Calculate tax expense for 20X6.

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Intermediate Accounting Volume 2

ISBN: 9781260881240

8th Edition

Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel

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