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Ayres Services acquired an asset for $32 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: Cumulative Temporary Difference Deferred Tax Liability 2024 $ 390 8 (32) $366 $ $ ($ in millions) 2025 $410 8 (0) $418 Beginning of 2024 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. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 0 Fo 2026 $ 425 0 8 (0) $ 433 2027 $ 460 8 (0) $468 End of 2024 End of 2025 End of 2026 End of 2027

Ayres Services acquired an asset for $32 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: Cumulative Temporary Difference Deferred Tax Liability 2024 $ 390 8 (32) $366 $ $ ($ in millions) 2025 $410 8 (0) $418 Beginning of 2024 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. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 0 Fo 2026 $ 425 0 8 (0) $ 433 2027 $ 460 8 (0) $468 End of 2024 End of 2025 End of 2026 End of 2027

FINANCIAL ACCOUNTING
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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Ayres Services acquired an asset for $32 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: Cumulative Temporary Difference Deferred Tax Liability 2024 $ 390 8 (32) $366 $ $ ($ in millions) 2025 $410 8 (0) $418 Beginning of 2024 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. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 0 Fo 2026 $ 425 0 8 (0) $ 433 2027 $ 460 8 (0) $468 End of 2024 End of 2025 End of 2026 End of 2027
Transcribed Image Text:Ayres Services acquired an asset for $32 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: Cumulative Temporary Difference Deferred Tax Liability 2024 $ 390 8 (32) $366 $ $ ($ in millions) 2025 $410 8 (0) $418 Beginning of 2024 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. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 0 Fo 2026 $ 425 0 8 (0) $ 433 2027 $ 460 8 (0) $468 End of 2024 End of 2025 End of 2026 End of 2027
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