depreciation exceeded book depreciation by $80,000. in 2021, Prance reports $600,000 of pretax book net income, and the book depreciation exceeds tax depreciation that year by $20,000. Prance reports no other temporary or permanent book-tax differences. The pertinent U.S. Federal corporate income tax rate is 21%, and Prance earned an after-tax rate of return on capital of 8%. Enter below the 2021 Prance's deferred tax expense and any deferred tax asset or liability. If an amount is zero, enter "0". If required, round your answer to nearest whole value. Deferred tax asset account balance 16,800 X Deferred tax liability account balance a. b. 4,200 X c. In net present value terms, what has been the value to Prance of accelerating $20,000 of 2021 book depreciation to 2020? The present value factor at 8% is 0.9259.
depreciation exceeded book depreciation by $80,000. in 2021, Prance reports $600,000 of pretax book net income, and the book depreciation exceeds tax depreciation that year by $20,000. Prance reports no other temporary or permanent book-tax differences. The pertinent U.S. Federal corporate income tax rate is 21%, and Prance earned an after-tax rate of return on capital of 8%. Enter below the 2021 Prance's deferred tax expense and any deferred tax asset or liability. If an amount is zero, enter "0". If required, round your answer to nearest whole value. Deferred tax asset account balance 16,800 X Deferred tax liability account balance a. b. 4,200 X c. In net present value terms, what has been the value to Prance of accelerating $20,000 of 2021 book depreciation to 2020? The present value factor at 8% is 0.9259.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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4.
Transcribed Image Text:Prance, Inc., earned pretax book net income of $800,000 in 2020. Prance acquired a depreciable asset in 2020, and first-year tax
depreciation exceeded book depreciation by $80,000.
In 2021, Prance reports $600,000 of pretax book net income, and the book depreciation exceeds tax depreciation that year by $20,000.
Prance reports no other temporary or permanent book-tax differences. The pertinent U.S. Federal corporate income tax rate is 21%, and
Prance earned an after-tax rate of return on capital of 8%.
Enter below the 2021 Prance's deferred tax expense and any deferred tax asset or liability.
If an amount is zero, enter "0". If required, round your answer to nearest whole value.
Deferred tax asset account balance
Deferred tax liability account balance
a.
b.
16,800 X
4,200 X
c. In net present value terms, what has been the value to Prance of accelerating $20,000 of 2021 book depreciation to 2020? The present
value factor at 8% is 0.9259.
3,889 X
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