Answer choices for #1&2:

the same each year

Increasing

Decreasing

Answer choices for #3

$32,000

$100,000

$132,000

Answer choices #4

$32,000x 25%= $8,000

$100,000x 25%=$33,000

$132,000x 25%=$25,000

Answer choices #5

$27,000

$176,000

$19,000

Answer choices #6

$32,000

$100,000

$0

RapidRoad Transit Is acquiring a tractor trailer at a cost of $400,000. You are company Controller and have been asked by one of the division managers the advantage of using MACRS accelerated depreciation on the tax return while using straight-line depreciation on the division's financial report. To assist in your explanation, you have prepared the graph below. Here are the questions you will pose to the manager to help him see the benefits Deferred Income Taxes $200,000 30,000 $180,000 27900 175.000 25,000 $160,000 $140,000 20,000 6 $120,000 132,000 17.000 15,000 Depreciation $100,000 Deferred Tax Liability 100,000 100,000 100,000 100,000 $80,000 10,000 8 60,000 $60,000 $40,000 $20,000 5,000 32,000 $0 quired: What is the pattern of depreciation that will be reported in the financial statements? What is the pattern of depreciation that will be reported in the tax retum? In Year 1. what is the difference between MACRS accelerated depreciation on the tax return and straight-line depreciation on the division's financial report? RapidRoad will be able to defer some of its tax the first year by deducting a larger amount of depreciation (reducing taxable income) than the straight-line depreciation in the income statement. Because the tax rate is 25%, what is the amount of the deferred tax liability What is the deferred tax liability balance after two years? What is the deferred tax liability balance after four years