Tax rate 21%

Problem P6 Facts: ABC's tax accounting methods and GAAP accounting methods are the same except for the method used to account for depreciation expense on property and equipment. Per GAAP, ABC recognizes depreciation expense over the economic life of the asset using the straight-line method. Per tax rules, ABC recognizes depreciation expense using the MACRS system. As a consequence, accumulated depreciation for GAAP was $100,000 at December 31, 2019 and $140,000 at December 31, 2020. Tax-method accumulated depreciation was $130,000 at December 31, 2019 and $174,000 at December 31, 2020. ABC reports pretax GAAP earnings of $2,500,000 for the 12 months ended December 31, 2020. Embedded in pretax GAAP earnings is interest revenue of SO carned on bonds issued by the State of Texas; a $0 fine paid to the EPA, and $0 of insurance expense on premiums paid for a life insurance policy on the CEO for which the company is beneficiary, ABC reported a deferred tax liability of S6,300 at December 31, 2019 relating to the book/tax difference in method of accounting for depreciation on property and equipment. Assume no purchases or sales of property and equipment during 2020. Required: 16. Determine the amount of 2020 current federal income tax expense 17. Determine the amount of 2020 deferred federal income tax expense. 18. Determine the 12/31/2020 balance in the deferred tax asset account. 19. Determine the 12/31/2020 balance in the deferred tax liability account 20. Determine the amount of 2020 GAAP net income