On January 1, 2011, Gore, Inc. purchased a machine for $720,000. which will be depreciated $72,000. per year for financial statement reporting purposes. For income tax reporting, Gore elected to expense $80,000. and to use straight-line depreciation which will allow a cost recovery deduction of $64,000 for 2011. Assume a present and future enacted income tax rate of 30%. What amount should be added to Gore's deferred income tax liability for this temporary difference at December 31, 2011? a. $43,200 b. $24,000 c. $21,600 d. $19,200
On January 1, 2011, Gore, Inc. purchased a machine for $720,000. which will be depreciated $72,000. per year for financial statement reporting purposes. For income tax reporting, Gore elected to expense $80,000. and to use straight-line depreciation which will allow a cost recovery deduction of $64,000 for 2011. Assume a present and future enacted income tax rate of 30%. What amount should be added to Gore's deferred income tax liability for this temporary difference at December 31, 2011? a. $43,200 b. $24,000 c. $21,600 d. $19,200
Chapter7: Losses—deductions And Limitations
Section: Chapter Questions
Problem 70IIP
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Transcribed Image Text:On January 1, 2011, Gore, Inc. purchased a machine for $720,000.
which will be depreciated $72,000. per year for financial statement
reporting purposes. For income tax reporting, Gore elected to expense
$80,000. and to use straight-line depreciation which will allow a cost
recovery deduction of $64,000 for 2011. Assume a present and future
enacted income tax rate of 30%.
What amount should be added to Gore's deferred income tax liability
for this temporary difference at December 31, 2011?
a. $43,200
b. $24,000
c. $21,600
d. $19,200
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