In: Accounting
Company B acquired the following piece of equipment. Your staff accountant computed the book and tax depreciation. It is up to you to determine the deferred tax amounts.
Equipment cost | $50,000 |
Salvage | 5,000 |
Useful life | 5 |
Tax rate | 21% |
Depreciation for book and tax purposes is as follows:
Book | Tax | |
20X1 | 9,000 | 20,000 |
20X2 | 9,000 | 12,000 |
20X3 | 9,000 | 7,200 |
20X4 | 9,000 | 4,320 |
20X5 | 9,000 | 1,480 |
What is the deferred taxes payable balance as of December
31, 20X3?
The Deffered Taxes payable for December 31, 2003 will be
Depreciation claim as per Books = $ 9,000
Less Depreciation Allowed as per income Tax $7,200
Additional income for Tax purpose $1,800
Deffered Taxes payable @ 21% $378