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The temporary book-tax difference for the depreciable asset

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Reference no: EM131003711

Ayres Services acquired an asset for $80 million in 2011. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2011, 2012, 2013, and 2014 are as follows:

Required:

For December 31 of each year, determine 

(a) The temporary book-tax difference for the depreciable asset and 

(b) The balance to be reported in the deferred tax liability account. 

Reference no: EM131003711

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