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Ignore the phrase calculate income tax amounts under various circumstances right above. it is for a different questions Q2. Ayres Services acquired an asset for
Ignore the phrase "calculate income tax amounts under various circumstances" right above. it is for a different questions
Q2. Ayres Services acquired an asset for $208 million in 2021. 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 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 $355 30 (54) $331 ($ in millions) 2022 2023 $375 $390 30 30 (34) (20) $371 $400 2024 $425 30 (12) $443 Required: 1. For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset, b) the total future taxable amount as of the end of each year, and (c) the balance to be reported in the deferred tax liability account as the end of year. End of 2023 $(18.00) End of 2024 $0.00 Cumulative Temporary Difference Future Taxable amount Deferred Tax Liability End of 2021 $(24.00) 24 $6.00 End of 2022 $(28.00) 28 $7.00 18 0 $4.50 $0.00 2. For December 31 of each year, prepare the journal entry to record income taxes expense. Calculate income tax amounts under various circumstancesStep by Step Solution
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