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Ayres Services acquired an asset for $114 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight line
Ayres Services acquired an asset for $114 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 10% Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020 and 2021 are as follows Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2018 $ 415 28.5 (33.5) $ 410 (5 in millions) 2019 2020 $ 435 S 450 28.5 28.5 (41.5) (23.5) S 422 $ 455 2021 S 485 28.5 (15.5) $ 498 Required: Determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Answer is complete but not entirely correct. Beginning of End of End of End of End of 2018 2018 2019 2020 2021 000 $ 50 130 S (5.0) $ (13.0) 000s 200 $ 52S 20 S 52 Temporary Difference Deferred Tax Liability
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