QUESTION 1: (5 marks)

Bolous Ltd purchased a depreciable asset for $100,000, at the beginning of year 1.

For accounting purposes, the asset is depreciated on a straight-line basis over an estimated useful life of 8 years, with zero residual value.

For taxation purposes the asset is depreciated 20% on cost per annum.

The tax rate is 30%.

Required:

What is the amount of the deferred tax liability relating to this depreciable asset at the end of years 1, 2 and 3? Students required to show the calculation in details.