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Calculate the depreciation expense for the truck

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Reference no: EM133011283

The ABC Company bought a truck on July 1, 2017 for $90,000. It planned to keep the truck for four years at which time it expected to sell the truck for $30,000. The company elected to amortize the truck for financial reporting purposes using the declining balance method with an annual rate of 30%. The company has a December 31 year-end and a corporate income tax rate of 50%. The company US-based and is required to determine tax depreciation for reporting to the taxation authority using the MACRS 5-year category

Problem 1: Calculate the following for both the years 2017 and 2018:

  1. The depreciation expense for the truck that would be shown on the company's income statement
  2. The amount of tax depreciation that would be claimed the change in deferred taxes.

Reference no: EM133011283

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