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Davidson Inc. purchased a machine for $20,000 at the beginning of 2019. It will be depreciated over 5 years on the straight-line basis, with no
Davidson Inc. purchased a machine for $20,000 at the beginning of 2019. It will be depreciated over 5 years on the straight-line basis, with no residual value. For the purpose of this question, ignore any Accelerated Investment Incentive for the CCA rate. For tax purposes, the 20% declining-balance method must be used, with a half-year's amount being claimed in the year of acquisition. What will the deferred tax balance be in respect to this machine at the end of 2021? The company's tax rate is 25% in all years.
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