j. Plant and equipment to be depreciated are composed of the following: Assets Date Acquired Cost Estimated Usage or Life Salvage Value Depreciation

Method

Building 7/1/10 $306,000 25 years $20,000 sum-of-the-yearsdigits

Truck No. 1 4/1/11 28,000 60,000 miles 3,100 miles driven

Truck No. 2 9/1/13 33,000 60,000 miles 4,200 miles driven

Lift No. 1 8/17/07 7,900 10 years 900 straight-line

(Sold 12/31/14)

Lift No. 2 3/29/11 4,500 10 years 500 straight-line

Lift No. 3 9/16/12 5,000 10 years 500 straight-line

Office All prior to 32,800 7 years 2,000 straight-line

Equipment 1/1/14

Computer 12/22/14 6,100 5 years 1,300 Double-decling balance

Truck No. 1 has been driven 45,000 miles prior to 1/1/14 and truck No. 2 has been driven 30,500 miles prior to 1/1/14. During 2014 truck No. 1 was driven 12,000 miles and truck No. 2 was driven 14,000 miles. Remember that the Rockford Company takes a half-years depreciation in the year of acquisition and a half-year in the year of sale.

k. Complete the work sheet. In completing the worksheet, compute State of Illinois corporate income taxes at 41/2% of pretax income. The state income tax is deductible on the federal tax return, and the federal tax is not deductible on the Illinois return. Assume federal corporate income tax on income subject to federal tax is as follows:

first $50,000 @15%

next 25,000 @25%

remainder @34%

Income between $100,000 and $335,000 is assessed a 5% federal surtax, not to exceed $11,750.

Hint: Corporations subject to federal income tax must make estimated tax payments throughout the year. At the time of the payment, the account Income Tax Expense is debited and Cash is credited. To determine the taxable income at year end, net the total debits and total credits from the income statement in the worksheet. Note that the estimated income tax expense is listed as a debit and must be subtracted from total debits when determining taxable income (federal tax is not a deductible item).