Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $425,000 2016 486,000 2017 570,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased on January 1, 2015, at a cost of $177,000. The equipment is expected to last three years and has a(n) $15,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $101,000 in 2015, $41,000 in 2016, and $20,000 in 2017. Wyhowski's tax rate is 35%. Required: Enter all amounts as positive numbers. 1. How much did Wyhowski pay in income tax each year? If required, round all calculations to the nearest dollar. Year Taxes Paid 2015 $ 2016 $ 2017 $ 2. How much income tax expense did Wyhowski record each year? Year Income Tax Expense 2015 $ 2016 $ 2017 $ 3. What is the balance in the Deferred Income Tax account at the end of 2015, 2016, and 2017? If your answer is zero, enter "0". If required, round all calculations to the nearest dollar. Year Balance Debit or Credit 2015 $ Credit 2016 $ Credit 2017 $ No balance
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows:
| 2015 | $425,000 |
| 2016 | 486,000 |
| 2017 | 570,000 |
When calculating income, Wyhowski deducted
Required:
Enter all amounts as positive numbers.
1. How much did Wyhowski pay in income tax each year? If required, round all calculations to the nearest dollar.
| Year | Taxes Paid |
| 2015 | $ |
| 2016 | $ |
| 2017 | $ |
2. How much income tax expense did Wyhowski record each year?
| Year | Income Tax Expense |
| 2015 | $ |
| 2016 | $ |
| 2017 | $ |
3. What is the balance in the
| Year | Balance | Debit or Credit |
| 2015 | $ | Credit |
| 2016 | $ | Credit |
| 2017 | $ | No balance |
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