Use the following information for questions 15-17. Costco Inc. began operations on January 1, YR11 and purchased a delivery vehicle on that date for $150. The vehicle has an estimated life of three (3) years with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and accelerated depreciation is used for tax purposes. A comparison of book and tax depreciation appears below. Year YR11 YR12 YR13 Total Financial Tax Depreciation Depreciation 50 80 50 60 50 10 150 150 Tax Credit: Under current tax law the company earned an investment tax credit of $15 related to the purchase of the vehicle. The company has elected to use the Flow-Through method to account for the investment tax credit. Deposit: During YR11 the company made a tax deposit for estimated Federal income tax totaling $10. The journal entry was - 10 Income Tax Payable Cash 10 Taxable Income: Taxable Income for the year ended December 31, YR11 was $200. Tax Rates: Federal income tax rates are as follows: 30% for YR11; 40% for YR12; and 50% for YR13. 16. After all adjustments, the December 31, YR11 general ledger balances for the deferred tax accounts should be: Deferred Tax Liability Deferred Tax Credit 0 a. b. 10 cr. Deferred Tax Asset 4 dr. 4 dr. 0 0 None of the above. 35 cr. 20 cr. 35 cr. 16 cr. 0 0 d. e. Use the following information for questions 15-17. Costco Inc. began operations on January 1, YR11 and purchased a delivery vehicle on that date for $150. The vehicle has an estimated life of three (3) years with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and accelerated depreciation is used for tax purposes. A comparison of book and tax depreciation appears below. Year YR11 YR12 YR13 Total Financial Tax Depreciation Depreciation 50 80 50 60 50 10 150 150 Tax Credit: Under current tax law the company earned an investment tax credit of $15 related to the purchase of the vehicle. The company has elected to use the Flow-Through method to account for the investment tax credit. Deposit: During YR11 the company made a tax deposit for estimated Federal income tax totaling $10. The journal entry was - 10 Income Tax Payable Cash 10 Taxable Income: Taxable Income for the year ended December 31, YR11 was $200. Tax Rates: Federal income tax rates are as follows: 30% for YR11; 40% for YR12; and 50% for YR13. 16. After all adjustments, the December 31, YR11 general ledger balances for the deferred tax accounts should be: Deferred Tax Liability Deferred Tax Credit 0 a. b. 10 cr. Deferred Tax Asset 4 dr. 4 dr. 0 0 None of the above. 35 cr. 20 cr. 35 cr. 16 cr. 0 0 d. e
