E 16-3 Taxable income given; calculate deferred tax liability LO16-1 Ayres Services acquired an asset for $80 million in 2016. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2016, 2017, 2018, and 2019 are as follows: ($ in millions) 2016 2017 2018 2019 Pretax accounting income $330 $350 $365 $400 Depreciation on the income statement 20 20 20 20 Depreciation on the tax return (25) (33) (15) (7) Taxable income $325 $337 $370 $413 74 SECTION 3 Financial Instruments and Liabilities Required: For December 31 of each year, determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account.