Chapter S, Problem 5E

Calculating a Deferred Tax Liability

LOS-5 On January 1, 2013, Berkshire Hathaway purchased a piece of equipment for $90,000. The following table reflects how Berkshire is depreciating the equipment for financial reporting purposes and for tax purposes:

TAX
Fiscal Year Ending	Depreciation Expense	Accumulated Depreciation	Book Value
			90,000
2013	30,000	30,000	60,000
2014	40,005	70,005	19,995
2015	19,995	90,000	0

TAX
Fiscal Year Ending	Depreciation Expense	Accumulated Depreciation	Book Value
			90,000
2013	30,000	30,000	60,000
2014	40,005	70,005	19,995
2015	19,995	90,000	0

Use the information above to fill in the deferred tax liability column below:

FINANCIAL REPORTING
Fiscal Year Ending		Taxable	Tax	Deferred Tax
	Revenue	Income	Expense	Liability
2013	200,000	170,000	59,500
2014	200,000	170,000	59,500
2015	200,000	170,000	59,500