Question 3

Walter Inc purchased equipment for $500,000 on January 2, 2020. The equipment had an estimated service life of 5 years and no residual value. Straight-line depreciation is used for book purposes. CCA are as follows: $200,000 for 2020, $140,000 for 2021, $90,000 for 2022, $50,000 for 2023, and $20,000 for 2024. Walters tax rate is 20% for all years.

Instructions

1. Determine the deferred tax liability associated with the equipment at end of each year from 2020 to 2022.

Compute the deferred tax expense or benefit of each year from 2020 to 2022