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Ayres Services acquired an asset for $216 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis
Ayres Services acquired an asset for $216 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: ($ in millions) 2025 2026 $ 435 $ 450 54 54 (94) (32) $ 403 $ 395 $ 472 Cumulative Temporary Difference Deferred Tax Liability 2024 $415 54 (66) 2027 $ 485 54 (24) $ 515 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 "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Beginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027 Ayres Services acquired an asset for $216 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: 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 " 0 " wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50 )
Ayres Services acquired an asset for $216 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: ($ in millions) 2025 2026 $ 435 $ 450 54 54 (94) (32) $ 403 $ 395 $ 472 Cumulative Temporary Difference Deferred Tax Liability 2024 $415 54 (66) 2027 $ 485 54 (24) $ 515 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 "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Beginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027
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