Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on astraight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows:Pretax accounting incomeDepreciation on the income statementDepreciation on the tax returnTaxable income2021$38024(96)Cumulative Temporary DifferenceDeferred Tax Liability$308($ in millions)202320242022$40024(0) (0)$415 $4502424(0)$424 $439 $474Required: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. (Leave no cell blank, enter "0" wherever applicable. Enter your answersin millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)Beginning of 2021 End of 2021End of 2022End of 2023End of 2024

Ayres Services Computation of Book tax differences and balance to be reported in a deferred tax…

Ayres Services acquired an asset for $96 million in 2021. 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 2021. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 Cumulative Temporary Difference Deferred Tax Liability $380 24 (96) $308 ($ in millions) 2022 2023 2024 $400 $415 $450 24 24 24 (0) (Ⓒ) (0) $424 $439 $474 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 blank, enter "0" wherever applicable. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Beginning of 2021 End of 2021 End of 2022 End of 2023 End of 2024

Ayres Services acquired an asset for $96 million in 2021. 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 2021. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 Cumulative Temporary Difference Deferred Tax Liability $380 24 (96) $308 ($ in millions) 2022 2023 2024 $400 $415 $450 24 24 24 (0) (Ⓒ) (0) $424 $439 $474 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 blank, enter "0" wherever applicable. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Beginning of 2021 End of 2021 End of 2022 End of 2023 End of 2024

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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