Question
Company B started business on January 1, 20X1, and bought the following piece of equipment. Cost of asset $200,000 Salvage 20,000 Useful life 5 Tax
Company B started business on January 1, 20X1, and bought the following piece of equipment.
| Cost of asset | $200,000 |
| Salvage | 20,000 |
| Useful life | 5 |
| Tax rate | 21% |
| 20X1 estimated tax payment | 4,000 |
Depreciation for book and tax purposes is as follows:
| Book | Tax | |
| 20X1 | 36,000 | 80,000 |
| 20X2 | 36,000 | 48,000 |
| 20X3 | 36,000 | 28,800 |
| 20X4 | 36,000 | 17,280 |
| 20X5 | 36,000 | 5,920 |
20X1 income statement information:
| Sales | 362,000 |
| Expenses (does not include depreciation expense and tax expense) | 217,000 |
What is the ending balance of taxes payable on the December 31, 20X1 balance sheet?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Analysis for Financial Management
Authors: Robert C. Higgins
10th edition
007803468X, 978-0078034688
