Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years ona straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rateis 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows:Pretax accounting incomeDepreciation on the income statementDepreciation on the tax returnTaxable incomeRequired:2024$ 47020(80)$410($ in millions)2025$ 490Cumulative Temporary DifferenceDeferred Tax Liability20(0)$ 5102026$ 50520$ 5252827$ 540Beginning of 202420(0)For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) thebalance to be reported in the deferred tax liability account.$ 560Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).Leave no cellPENYEnd of 2024 End of 2025End of 2026End of 2027

Ayres Services acquired an asset for $80 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: 2024 $470 Cumulative Temporary Difference Deferred Tax Liability ($ in millions) 2025 $490 20 (80) $410510 20 (0) 2026 $ 505 20 (0) $ 525 2827 $ 540 20 (0) $ 560 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). Beginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027

Ayres Services acquired an asset for $80 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: 2024 $470 Cumulative Temporary Difference Deferred Tax Liability ($ in millions) 2025 $490 20 (80) $410510 20 (0) 2026 $ 505 20 (0) $ 525 2827 $ 540 20 (0) $ 560 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). Beginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027

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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