Exercise 11-25 Tamarisk Enterprises purchased a delivery truck on January 1, 2017, at a cost of $28,620. The truck has a useful life of 7 years with an estimated salvage value of $6,360. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2017 and 2018 the company has revenues of $212,000 and operating expenses (excluding depreciation) of $137,800. Recovery Year MACRS Depreciation Rates by Class of Property 3-year 5-year 7-year 10-year (200% DB) (200% DB) (200% DB) (200% DB) 33.33 20.00 14.29 10.00 44.45 32.00 24.29 18.00 14.81% 19.20 17.49 14.40 7.41 11.52* 12.49 11.52 11.52 9.22 5.76 8.92 7.37 8.93 6.55* 4.46 6.55 6.56 6.55 3.28 15-year (150% DB) 5.00 9.50 8.55 7.70 6.93 6.23 8.938 5.90* 5.90 5.91 5.90 5.91 20-vear (150% DB) 3.750 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462% 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 5.91 2.95 *Switchover to straight-line depreciation. Compute income before income taxes for 2017 and 2018. 2017 2018 Income before income taxes LINK TO TEXT Compute taxable income for 2017 and 2018. (Round answers to 0 decimal places, e.g. 45,892.) Taxable income for 2017 Taxable income for 2018 LINK TO TEXT Determine the total depreciation to be taken over the useful life of the delivery truck for both book and tax purposes. Book purposes s Tax purposes Exercise 11-25 Tamarisk Enterprises purchased a delivery truck on January 1, 2017, at a cost of $28,620. The truck has a useful life of 7 years with an estimated salvage value of $6,360. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2017 and 2018 the company has revenues of $212,000 and operating expenses (excluding depreciation) of $137,800. Recovery Year MACRS Depreciation Rates by Class of Property 3-year 5-year 7-year 10-year (200% DB) (200% DB) (200% DB) (200% DB) 33.33 20.00 14.29 10.00 44.45 32.00 24.29 18.00 14.81% 19.20 17.49 14.40 7.41 11.52* 12.49 11.52 11.52 9.22 5.76 8.92 7.37 8.93 6.55* 4.46 6.55 6.56 6.55 3.28 15-year (150% DB) 5.00 9.50 8.55 7.70 6.93 6.23 8.938 5.90* 5.90 5.91 5.90 5.91 20-vear (150% DB) 3.750 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462% 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 5.91 2.95 *Switchover to straight-line depreciation. Compute income before income taxes for 2017 and 2018. 2017 2018 Income before income taxes LINK TO TEXT Compute taxable income for 2017 and 2018. (Round answers to 0 decimal places, e.g. 45,892.) Taxable income for 2017 Taxable income for 2018 LINK TO TEXT Determine the total depreciation to be taken over the useful life of the delivery truck for both book and tax purposes. Book purposes s Tax purposes
