Question
At the beginning of year 1, celery company purchased equipment with a cost of $1,000. The equipment will be depreciated for financial reporting purposes over
At the beginning of year 1, celery company purchased equipment with a cost of $1,000. The equipment will be depreciated for financial reporting purposes over 4 years on a straight-line basis, assuming no salvage value. Celery will use MACRS with a three-year class life for tax purposes, so the deductions on the tax return will be :
year 1: 333,000
year 2: 445,000
the tax rate for years 1 and 2 is 20%, and during year 2, the tax rate was changed to 30% for all future years beginning in year 3. Celery has no other book-tax differences. What will be the amount of the deferred tax liability that Celery reports on its end of year 2 balance sheet?
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