account tutor catch it and solve as soon as possible On January 1, 2011, Gore, Inc. purchased a machine for $720,000.which will be depreciated $72,000. per year for financial statementreporting purposes. For income tax reporting, Gore elected to expense$80,000. and to use straight-line depreciation which will allow a costrecovery deduction of $64,000 for 2011. Assume a present and futureenacted income tax rate of 30%.What amount should be added to Gore's deferred income tax liabilityfor this temporary difference at December 31, 2011?a. $43,200b. $24,000c. $21,600d. $19,200

Step 1:Income tax liability is the amount to be paid after calculating tax on taxable income. If the…

Answered: On January 1, 2011, Gore, Inc.…

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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Thor, Inc reported depreciation on the income statement by the straight-line method on an asset with a four-year useful life. MACRS is used for the tax return. Income statement: $5 million each year. Tax Return: 2020 $7 million; 2021 $6 million; 2022 $4 million; 2023 $3 million. The income tax rate is 20% for all years. The current year is 2022. Which of the following statements is true regarding the differences between accounting and tax depreciation? The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is originating, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.4M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.6M. The 2022…
On January 1, 2021, Sheridan, Inc. purchased a machine for $2180000 which will be depreciated $218000 per year for financial statement reporting purposes. For income tax reporting, Sheridan elected to expense $243000 and to use straight-line depreciation which will allow a cost recovery deduction of $193000 for 2021. Assume a present and future enacted income tax rate of 20%. What amount should be added to Sheridan's deferred income tax liability for this temporary difference at December 31, 2021?
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