Question

e IH) new doc 201901-2218 × It 0 A 10 file:///C:/UserstałalDownloads/new%20doc%202019-01-22%2018.5749%20(1).pdf ← → Alexa Inc. purchased equipment in 2018 for $50,000 with no residual value. On December 31, 2020, accumu- lated depreciation using the straight-line method for financial reporting was $15,000. For tax purposes, Alexa uses MACRS depreciation resulting in $35,600 in accumulated depreciation for tax purposes on December 31, 2020. Taxable income was $100,000 for 2020 and the company's tax rate is 25%. a. Determine the GAAP basis of equipment (net) on December 30, 2020. b. Determine the tax basis of equipment on December 30, 2020. c. Assuming a defered tax liability balance of $4,900 on December 3 1, 2019, record İncome tax expense for 2020. ^ Qs ENG 7:05 PM

Answer 1

Answer

Answer GAAP basis Tax Basis a & b Equipment Accumulated Depreciation Equipment (net) 50,000 15,000 35,000 50,000 35,600 14,400 Difference in basis Ending Deferred tax liability @25% Beginning balance Deferred tax expense for the year 20,600 5,150 4,900 250 Taxable Income Current Tax expense @25% Deferred tax expense for the year Income tax expense 100000 25000 A 250 B 25,250 A+B General Journal Current Ta Expense Income tax payable Year 2020 Debit Credit 25,000 25,000 Deferred Tax Expense Deferred tax Liabilit 250 250 Alternativel Combined Ent 25,250 Income lax Expense Income tax pavable Deferred tax Liabilit 25000 250