ch 19 q 7

2. On January 1, 2020, equipment costing $587,600 is purchased. For financial reporting purposes, the company uses straightline depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5 -year life. (Hint: For tax purposes, the half-year convention as discussed in Appendix 11 A must be used.) 3. In January 2021, $228,000 is collected in advance rental of a building for a 3-year period. The entire $228,000 is reported as taxable income in 2021, but $152,000 of the $228,000 is reported as unearned revenue in 2021 for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in 2022 and 2023. 4. The tax rate is 20% in 2020 and all subsequent periods. (Hint: To find taxable income in 2020 and 2021 , the related income taxes payable amounts will have to be "grossed up." Determine the amount to report for deferred income taxes at the end of 2020 , and indicate how it should be classified on the balance sheet. 2. On January 1, 2020, equipment costing $587,600 is purchased. For financial reporting purposes, the company uses straightline depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5 -year life. (Hint: For tax purposes, the half-year convention as discussed in Appendix 11 A must be used.) 3. In January 2021, $228,000 is collected in advance rental of a building for a 3-year period. The entire $228,000 is reported as taxable income in 2021, but $152,000 of the $228,000 is reported as unearned revenue in 2021 for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in 2022 and 2023. 4. The tax rate is 20% in 2020 and all subsequent periods. (Hint: To find taxable income in 2020 and 2021 , the related income taxes payable amounts will have to be "grossed up." Determine the amount to report for deferred income taxes at the end of 2020 , and indicate how it should be classified on the balance sheet