1 8. On January 1, 2021, a company purchased equipment for $165,000. The asset has a 3-year useful life and no residual value. For financial reporting, the asset is depreciated on a straight-line basis. For tax reporting, depreciation is $99,000 in 2021, $49,500 in 2022, and $16,500 in 2023 (based on MACRS). Taxable income in 2021 is $215,000. There are no other differences between accounting and taxable income. The tax rate is 24% for all years. Annual depreciation expense on the books is Income tax payable in 2021 is The balance of the deferred tax account at the end of 2021 is Income tax expense in 2021 is Pretax accounting income in 2021 is Net income in 2021 is 9. 10. 11. 12. 13. 14. On January 1, ABC signed a 20-year operating lease with annual payments of $51,000 beginning immediately. Appropriately discounted at 12%, the PV of lease payments is $426,655. The amortization expense accrued at the end of the first year is 15. ABC leased a building from XYZ. The present value of lease payments is $176,053, which is 100% of the asset's fair value. The useful life of the building is 16 years, and the lease term is 8 years. In year 1 of the lease, ABC's amortization expense is 16. XYZ is lessor in a sales-type lease. The lessor acquired the asset for $521,000 and the present value of lease payments is $575,003. Selling profit is 17. ABC acquired equipment in 2020. At the end of 2020, the equipment had a book value $642,000 and a tax basis $192,600. The difference will reverse equally over 2021-2023. Assume a tax rate of 22% for 2021 and 28% for 2022-2023. In 2021, ABC will reduce the deferred tax account by