Alexa Inc. purchased equipment two years ago for $80,000 with no residual value. On December 31, accumulated depreciation on the equipment using the straight-line method for financial reporting was $20,000. For tax purposes, Alexa uses MACRS depreciation resulting in $56,960 in accumulated depreciation for tax purposes on December 31. Taxable income was $160,000 and the companys tax rate is 25%.

a. Determine the GAAP basis of equipment (net) on December 31. Equipment, net (GAAP basis) $Answer

b. Determine the tax basis of equipment on December 31. Equipment, net (tax basis) $Answer

c. Assuming a deferred tax liability balance of $7,840 on January 1, record income tax expense for the year.

Date	Account Name	Dr.	Cr.
Dec. 31			Answer
			Answer
			Answer
	To record income tax expense.