Ayres Services acquired an asset for $144 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset/s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows:                                                                                                 _             ($ in millions) ____________                                                                                                 2021        2022         2023      2024 Pretax accounting income                                          $370        $390         $405      $440 Depreciation on the income statement                       36            36             36           36 Depreciation on the tax return                                    (57)         (49)           (23)        (15) Taxable income                                                                  $349         $377         $418       $461   Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell balance, enter “0” wherever applicable. Enter your answers in millions rounded to 2 decimal place (I,e., 5,500,000 should be entered as 5.50).                                                                     Beginning of 2021   End of 2021   End of 2022   End of 2023     End of 2024 Cumulative Temporary Difference            ___________   __________   __________   _________     ___________ Deferred Tax Liability                           _____________   __________   __________   _________    ____________

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.