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Ayres Services acquired an asset for $168 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line
Ayres Services acquired an asset for $168 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: ($ in millions)) 2024 2025 2026 2027 Pretax accounting income $385 $ 405 $ 420 $455 Depreciation on the income statement 42 42 42 42 Depreciation on the tax return (60) (64) (26) (18) $367 $ 383 $436 $479 Taxable income. Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account Note: Leave no cell blank, enter "O" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e.. 5,500,000 should be entered as 5.50). Cumulative Temporary Difference Deferred Tax Liability Beginning of 2024 End of 2024 End of +25 End of 2026 End of 2027
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