Alpesh Exercise 16-4 (Algo) Taxable Income given; calculate deferred tax liability from book-tax difference;financial statement effects [LO16-2]Ayres Services acquired an asset for $120 million in 2024. The asset is depreciated for financial reportingpurposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost isdepreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting Income, depreciation,and taxable Income in 2024, 2025, 2026, and 2027 are as follows:Pretax accounting incomeDepreciation on the incomestatementDepreciation on the tax returnTaxable incomeRequired:($ in millions)2024 2025 2026$ 355 $ 375 $ 3903030(54)(34)2027$ 4253030(20)(12)$ 331 $ 371 $ 400 $ 443For December 31 of each year, determine (a) the cumulative temporary book-tax difference for thedepreciable asset and (b) the balance to be reported in the deferred tax liability account.Note: Leave no cell blank, enter "O" wherever applicable. Enter your answers In milllons rounded to 2decimal places (l.e., 5,500,000 should be entered as 5.50).Cumulative Temporary DifferenceDeferred Tax LiabilityBeginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027

Deferred tax liability : Deferred tax liability refers to the liability to pay taxes in the future.…

Exercise 16-4 (Algo) Taxable Income given; calculate deferred tax liability from book-tax difference; financial statement effects [LO16-2] Ayres Services acquired an asset for $120 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting Income, depreciation, and taxable Income in 2024, 2025, 2026, and 2027 are as follows: ($ in millions) 2024 2025 2026 2027 Pretax accounting income Depreciation on the income statement $ 355 $375 $390 $ 425 30 30 30 Depreciation on the tax return. (54) Taxable income Required: 30 (34) (20) (12) $ 331 $ 371 $ 400 $ 443 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 "O" wherever applicable. Enter your answers in millions rounded to 2 decimal places (l.e., 5,500,000 should be entered as 5.50). Beginning of 2024 End of 2024 End of 2025 End of 2026 End of 2027 Cumulative Temporary Difference Deferred Tax Liability