Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 25% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $370,000 2 420,000 3 490,000 4 700,000 5 820,000 6 950,000 What is Infinity's income tax expense for year 1?
Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 25% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $370,000 2 420,000 3 490,000 4 700,000 5 820,000 6 950,000 What is Infinity's income tax expense for year 1?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages.
| Year | MACRS (%) |
| 1 | 20.00% |
| 2 | 32.00 |
| 3 | 19.20 |
| 4 | 11.52 |
| 5 | 11.52 |
| 6 | 5.76 |
The company is subject to a 25% income tax rate and has no other book-tax differences. Income before
| Year | Income before Tax and Depreciation |
| 1 | $370,000 |
| 2 | 420,000 |
| 3 | 490,000 |
| 4 | 700,000 |
| 5 | 820,000 |
| 6 | 950,000 |
What is Infinity's income tax expense for year 1?
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