Copyright CMcGraw-Hill Education. Permission required for reproduction or display Item Depreciation expense Gain on fixed asset disposition Bad debt expense Warranty expense Deferred compensation (1) Books (Dr) Cr S(2,400,000) 54,000 (165,000) (580,000) (300,000) (2) Tax (Dr) Cr $(3,100,000) 70,000 (95,000) (410,000) (450,000) (2) -(1) Difference (Favorable) Unfavorable $(700,000) 16,000 70,000 170,000 (150,000) 1. (counts as 2 questions) Describe the scenario about regarding the gain above. Use a made- up example to explain how the book gain was $54,000 but the taxable gain was $70,000 2. What were the total tax to be paid on the gain (assuming 21 percent rate)? Ignore the other items. Show work Copyright CMcGraw-Hill Education. Permission required for reproduction or display Item Depreciation expense Gain on fixed asset disposition Bad debt expense Warranty expense Deferred compensation (1) Books (Dr) Cr S(2,400,000) 54,000 (165,000) (580,000) (300,000) (2) Tax (Dr) Cr $(3,100,000) 70,000 (95,000) (410,000) (450,000) (2) -(1) Difference (Favorable) Unfavorable $(700,000) 16,000 70,000 170,000 (150,000) 1. (counts as 2 questions) Describe the scenario about regarding the gain above. Use a made- up example to explain how the book gain was $54,000 but the taxable gain was $70,000 2. What were the total tax to be paid on the gain (assuming 21 percent rate)? Ignore the other items. Show work