Repeat the requirements of Exercise 18-44, but now assume that the asset was \(100 \%\) expensed for tax purposes in 2020.

Exercise 18-44

Staples Corporation would have had identical income before taxes on both its income tax returns and its income statements for the years 2020 through 2023 except for a depreciable asset that cost \(\$ 120,000\). The asset was depreciated for income tax purposes using the following amounts: \(2020, \$ 48,000 ; 2021, \$ 36,000 ; 2022, \$ 24,000\) and \(2023, \$ 12,000\). However, for accounting purposes the straight-line method was used (that is, \(\$ 30,000\) per year). The accounting and tax periods both end December 31. There were no deferred taxes at the beginning of 2020. The depreciable asset has a four-year estimated life and no residual value. The tax rate for each year was \(25 \%\). Pretax GAAP income amounts for each of the four years were as follows.

Required

a. Prepare a schedule to compute the increase to income tax payable on December 31, 2020, 2021, 2022, and 2023.

b. Prepare a schedule to determine the deferred tax balances on December 31, 2020, 2021, 2022, and 2023. Assume a zero-beginning balance in the deferred tax liability account on January \(1,2020\).

c. Record the income tax journal entry on December 31, 2020, 2021, 2022, and 2023.

d. For each year show how the deferred income tax amount would be reported on the balance sheet.

e. Prepare the income tax section of the income statement for 2020 and provide the disclosure of current and deferred tax expense.

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2020 $230,000 2021 $250,000 2022 $240,000 2023..... $240,000