Parry Corp. acquired new equipment for $7,200,000 in 20X6. For accounting purposes, the equipment will be depreciated over five years, straight-line, with a full year's depreciation in the first year. For income tax purposes, Parry can take CCA over the next three years of $420,000 in 20X6, $756,000 in 20X7, and $609,000 in 20X8. Parry's income tax rate is 34%. Required: For each 31 December 20X6 through 20X8, determine: (Enter your answers in thousands to two decimal places.) 1. The tax basis for the equipment. 2. The accounting basis for the equipment. 3. The cumulative amount of the temporary difference relating to the equipment. 4. The balance of deferred income tax asset or liability that would be reported on the statement of financial position. 5. The amount of the deferred income tax adjustment.
Parry Corp. acquired new equipment for $7,200,000 in 20X6. For accounting purposes, the equipment will be depreciated over five years, straight-line, with a full year's depreciation in the first year. For income tax purposes, Parry can take CCA over the next three years of $420,000 in 20X6, $756,000 in 20X7, and $609,000 in 20X8. Parry's income tax rate is 34%. Required: For each 31 December 20X6 through 20X8, determine: (Enter your answers in thousands to two decimal places.) 1. The tax basis for the equipment. 2. The accounting basis for the equipment. 3. The cumulative amount of the temporary difference relating to the equipment. 4. The balance of deferred income tax asset or liability that would be reported on the statement of financial position. 5. The amount of the deferred income tax adjustment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Parry Corp. acquired new equipment for $7,200,000 in 20X6. For accounting purposes, the equipment will be
depreciated over five years, straight-line, with a full year's depreciation in the first year. For income tax purposes, Parry
can take CCA over the next three years of $420,000 in 20X6, $756,000 in 20X7, and $609,000 in 20X8. Parry's income
tax rate is 34%. Required: For each 31 December 20X6 through 20X8, determine: (Enter your answers in thousands to
two decimal places.) 1. The tax basis for the equipment. 2. The accounting basis for the equipment. 3. The
cumulative amount of the temporary difference relating to the equipment. 4. The balance of deferred income tax asset
or liability that would be reported on the statement of financial position. 5. The amount of the deferred income tax
adjustment.
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