Assume the President signs a stimulus package permitting businesses to expense $250,000 of equipment purchases in the current tax year, provided total equipment purchases do not exceed $750,000. Assume the ABC corporation purchased a machine for $500,000 during the qualifying time period. The machine has a 7-year MACRS life and a 10-year straight line write-off for financial accounting purposes. a. What is the deferred tax liability balance for Years 1, 5, and 9, assuming a 35- percent marginal tax rate? b. What is the journal entry to record the deferred tax benefit in Years 1, 5 and 9?

Assume the President signs a stimulus package permitting businesses to expense $250,000 of equipment purchases in the current tax year, provided total equipment purchases do not exceed $750,000. Assume the ABC corporation purchased a machine for $500,000 during the qualifying time period. The machine has a 7-year MACRS life and a 10-year straight line write-off for financial accounting purposes. a. What is the deferred tax liability balance for Years 1, 5, and 9, assuming a 35- percent marginal tax rate? b. What is the journal entry to record the deferred tax benefit in Years 1, 5 and 9?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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