Recording and Reporting Temporary Difference Staples Corporation would have had identical pretax income on both its income tax returns and its income statements for Year 1 through Year 4 except for a depreciable asset that cost $60,000. The asset was depreciated for income tax purposes at the following amounts: Year 1, $24,000; Year 2, $18,000; Year 3, $12,000; and Year 4, $6,000. However, for accounting purposes the straight-line method was used, resulting in $15,000 per year. The accounting and tax periods both end December 31. There were no deferred taxes at the beginning of Year 1. The depreciable asset has a four-year estimated life and no residual value. The tax rate for each year was 25%. Pretax GAAP income for each of the four years follows. Year Pretax GAAP Income Year 1 $115,000 Year 2 125,000 Year 3 120,000 Year 4 120,000 Required Schedules Journal Entries Financial Statement Presentation

Recerding and keporting Temperary Difference