Chapter 17, Problem 17.11BE

Temporary Differences, Deferred Tax Liability. Bobby James Puppet Company acquired a new plastic molding machine at the beginning of the current year at a cost of $420,000 The asset has a 6-year useful life for financial reporting purposes and is depreciated on a straight-line basis with no residual value expected at the end of its useful life The company uses the double-declining balance method on its income tax returns The company is subject to a 34% tax rate.

Compute the deferred tax portion of the income tax expense for the first 2 years