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In 2016, its first year of operations, Rich Corporation reported pretax financial income of $80,000 for the year ended December 31. Rich depreciates its fixed
In 2016, its first year of operations, Rich Corporation reported pretax financial income of $80,000 for the year ended December 31. Rich depreciates its fixed assets using an accelerated cost recovery method for tax purposes and straight-line depreciation for financial reporting. On assets acquired in 2016, the following are differences between depreciation on the tax return and accounting income during the asset's five-year life: 2016 2017 2018 2019 2020 Tax Depreciation in Excess of Book Depreciation $18,000 10.000 2,000 (13,000) (17,000) Enacted Tax Rates 30% 30% 35% 35% 40% Assuming no other temporary or permanent differences, which of the following combinations of noncurrent deferred tax liability and income taxes payable would be included on Richmond's December 31, 2016 balance sheet? Noncurrent Deferred Income Tax Liability I. $5,400 II. $7,650 III. $7,650 IV. $5,400 Income Taxes Payable $18,600 $18,600 $29,400 $24,000 A) I B) II C) III D) IV
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