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a . A lease liability with 1 5 remaining lease payments of $ 1 0 , 0 0 0 each, due annually on January 1
a A lease liability with remaining lease payments of $ each, due annually on January :
Lease liability
The incremental borrowing rate at the inception of the lease was and the lessor's implicit rate, which was known by CPS
Transportation, was
b A deferred income tax liability due to a single temporary difference. The only difference between CPS Transportation's taxable
income and pretax accounting income is depreciation on a machine acquired on January for $ The machine's
estimated useful life is five years, with no salvage value. Depreciation is computed using the straightline method for financial
reporting purposes and the MACRS method for tax purposes. Depreciation expense for tax and financial reporting purposes for
through is as follows:
The enacted federal income tax rates are for and for through CPS had a deferred tax liability of
$ as of December For the year ended December CPSs income before income taxes was $
On July CPS Transportation issued $ of bonds. The bonds mature in years, and interest is payable each
January and July The bonds were issued at a price to yield the investors CPS records interest at the effective interest
rate.
equired:
Determine CPS Transportation's income tax expense and net income for the year ended December
Determine CPS Transportation's interest expense for the year ended December
Prepare the longterm liabilities section of CPS Transportation's December balance sheet.
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