Given the income statement and balance sheets of Delias Doggie Daycare Inc. for calendar year 2015: 1. Use the book depreciation schedule to calculate the tax depreciation and accumulated tax depreciation (cost recovery) for each asset placed in service prior to 2015. 2. a. Calculate the tax gain/loss for each asset sold in 2015. Use total tax accumulated depreciation calculated in #1. Assume assets sold at same time as replacements are purchased. The garage was sold 6/1/15. b. Calculate the book/tax difference 3. a. Calculate tax depreciation expense for all assets placed in service in 2015. Use section 179 depreciation for all assets except for new vehicle. Business usage of new vehicle is 85%. Total miles travelled in 2015 7,000, total commuting miles 800. Van is 100% business use total mileage for 2015 = 22,500 miles. b. Calculate the book/tax difference 4. Calculate all other permanent/temporary book/tax differences. Note the following: direct bad debts write-offs for 2015 = $0. Officers salaries include $80,000 bonus accrued on 12/31/15 to >50% shareholder which was paid to her on January 5, 2016. 5. Calculate tax expense per book, tax to be paid this year with the tax return and deferred tax liability/asset. Show your calculations (refer to Deferred Tax Worksheet) 6. Revise income statement and balance sheet using additional information calculated in #5.

Dep Exp

Accumulated depreciation

Dep Exp

Accumulated depreciation

Dep Exp

Accumulated depreciation

Dep Exp

Accumulated depreciation

Asset

Date placed in Service

Cost

Life

Method

2012

12/31/12

2013

12/31/13

2014

12/31/14

2015

12/31/15

Computers

05/01/12

40,000

3

SL

8,889

8,889

13,333

22,222

13,333

35,556

4,444

40,000

Office Furniture

05/01/12

15,000

10

SL

1,000

1,000

1,500

2,500

1,500

4,000

1,500

5,500

Ford F-150 cargo van

05/01/12

30,000

6

SL

3,333

3,333

5,000

8,333

5,000

13,333

5,000

18,333

Canine cubbies

05/01/12

10,200

10

SL

680

680

1,020

1,700

1,020

2,720

595

3,315

New computers

06/01/15

30,000

3

SL

-

-

-

5,833

5,833

Doggie Treadmills

03/01/15

12,000

5

SL

-

-

-

2,000

2,000

New Canine Cubbies

08/01/15

14,500

10

SL

-

-

-

604

604

Lexus LS 460

10/01/15

82,000

6

SL

-

-

-

2,904

2,904

Building

05/01/12

250,000

25

SL

6,667

6,667

10,000

16,667

10,000

26,667

10,000

36,667

Land

05/01/12

28,000

-

-

-

-

Garage

05/01/12

60,000

25

SL

1,600

1,600

2,400

4,000

2,400

6,400

800

7,200

Land

05/01/12

5,000

576,700

22,169

22,169

33,253

55,422

33,253

88,676

33,681

122,357

SOLD IN 2015

(115,200)

(50,515)

Balance @ 12/31/15

461,500

71,842

Sale of assets (per books)

Computers

Canine cubbies

Garage

Land

Total

Sales price

20,000

3,500

60,000

40,000

123,500

Net book value

-

6,885

52,800

28,000

87,685

Gain/loss

20,000

(3,385)

7,200

12,000

35,815

Dep Exp

Accumulated depreciation

Dep Exp

Accumulated depreciation

Dep Exp

Accumulated depreciation

Dep Exp

Accumulated depreciation

Asset

Date placed in Service

Cost

Life

Method

2012

12/31/12

2013

12/31/13

2014

12/31/14

2015

12/31/15

Computers

05/01/12

40,000

-

-

-

-

Office Furniture

05/01/12

15,000

-

-

-

-

Ford F-150 cargo van

05/01/12

30,000

-

-

-

-

Canine cubbies

05/01/12

10,200

-

-

-

-

New computers

06/01/15

30,000

-

-

-

-

Doggie Treadmills

03/01/15

12,000

-

-

-

-

New Canine Cubbies

08/01/15

14,500

-

-

-

-

Lexus LS 460

10/01/15

82,000

-

-

-

-

Building

05/01/12

250,000

-

-

-

-

Land

05/01/12

28,000

-

-

-

-

Garage

05/01/12

60,000

-

-

-

-

Land

05/01/12

5,000

576,700

-

-

-

-

-

-

-

-

SOLD IN 2015

(115,200)

-

Balance @ 12/31/15

461,500

-

Sale of assets (per tax return)

Computers

Canine cubbies

Garage

Land

Total

Sales price

20,000

3,500

60,000

40,000

123,500

Net book value

Gain/loss

20,000

3,500

60,000

40,000

123,500

Delia's Doggie Daycare Inc
Statement of income
Year ended 12/31/15
Revenues
Fee Income		$ 555,000
Municpal Bond interest income		4,000
Gain on sale of fixed assets		35,815
Total revenue		594,815
Expenses
Salaries, officers		180,000
Salaries, other		90,000
Advertising		6,500
Repairs and maintenance		18,200
Taxes and licenses		30,100
Interest expense		5,800
Depreciation expense		33,681
Officers' life insurance		7,500
Bad debt expense		2,000
Meals and entertainment		4,800
Accounting		6,000
Automobile and truck expense		8,100
Bank charges		300
Insurance		5,600
Laundry and cleaning		5,550
Legal fees		2,500
Office expense		4,510
Telephone		3,875
Utilities		6,220
Dog whisperer		28,000
Dog toys		3,500
Dog treats		2,000
Total expenses		454,736
Net income before income taxes		140,079
Income tax expense
Net income		$ 140,079

Delia's Doggie Daycare Inc
Balance Sheets
December 31, 2015 and 2014
		2015			2014
Assets:
Current assets
Cash		$ 106,800			$ 47,271
Accounts receivable	43,000			25,000
Less: allowance for doubtful accounts	(7,000)			(5,000)
		36,000			20,000
Total current assets		142,800			67,271
Fixed assets
Property and equipment, net of accumulated depreciation		389,658			349,524
Total assets		$ 532,458			$ 416,795
Liabilities and Shareholders' Equity
Liabilities:
Current liabilities:
Accounts payable		$ 20,500			$ 12,000
Current maturities of long-term debt		53,000			50,000
Officer salaries payable		80,000			-
Total current liabilities		153,500			62,000
Mortgage payable		14,084			130,000
Total liabilities		167,584			192,000
Shareholders' Equity
Common stock		1,000			1,000
Retained earnings		363,874			223,795
Total shareholders' equity		364,874			224,795
Total libilities and shareholders' equity		$ 532,458			$ 416,795
		0			0