Wapato Corporation purchased a new piece of equipment at the beginning of Year 1 for $1,000,000. The expected life of the asset is 20 years with no residual value. The company uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes (the accelerated method results in $120,000 of depreciation in Year 1 and $100,000 of depreciation in Year 2). The companys federal income tax rate is 21 percent. The company determined its income tax obligations for Year 1 and Year 2 were $400,000 and $625,000, respectively.

Req 2:

Part 2

Required information [The following information applies to the questions displayed below.] Wapato Corporation purchased a new piece of equipment at the beginning of Year 1 for $1,000,000. The expected life of the asset is 20 years with no residual value. The company uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes (the accelerated method results in $120,000 of depreciation in Year 1 and $100,000 of depreciation in Year 2). The company's federal income tax rate is 21 percent. The company determined its income tax obligations for Year 1 and Year 2 were $400,000 and $625,000, respectively. Required: 1-a. Compute the deferred income tax amount reported on the balance sheet for each year. 1-b. Is the deferred income tax a liability or an asset? Complete this question by entering your answers in the tabs below. Compute the deferred income tax amount reported on the balance sheet for each year. Required: 1-a. Compute the deferred income tax amount reported on the balance sheet for each year. 1-b. Is the deferred income tax a liability or an asset? Complete this question by entering your answers in the tabs below. Is the deferred income tax a liability or an asset? Required information [The following information applies to the questions displayed below.] Wapato Corporation purchased a new piece of equipment at the beginning of Year 1 for $1,000,000. The expected life of the asset is 20 years with no residual value. The company uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes (the accelerated method results in $120,000 of depreciation in Year 1 and $100,000 of depreciation in Year 2). The company's federal income tax rate is 21 percent. The company determined its income tax obligations for Year 1 and Year 2 were $400,000 and $625,000, respectively. 2. Compute income tax expense for each year