1. At the beginning of 2021, Pitman Co. purchased an asset for $1,800,000 with an estimated useful life of 5 years and an estimated salvage value of $150,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.s tax rate is 20% for 2021 and all future years.

At the end of 2021, what are the book basis and the tax basis of the asset?

Book basis Tax basis

a. $1,320,000 $ 930,000

b. $1,470,000 $ 930,000

c. $1,470,000 $1,080,000

d. $1,320,000 $1,080,000