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MacBillpurchaseda sowing machine on January 1, 2019. For its sowing machines, MacBilluses straight-line depreciation for financial...

MacBillpurchaseda sowing machine on January 1, 2019. For its sowing machines, MacBilluses straight-line depreciation for financial reporting purposes (US GAAP) and accelerated depreciation for tax purposes. Its useful life is 3 years. Assume income before depreciation is $1,000 in 2019. MacBill has a 30% income tax rate for all years. The depreciation table is as follows:

2019

2020

2021

Straight-Line Depreciation

$500

$500

$500

Accelerated Depreciation

$850

$450

$200
  1. What is the tax expense on its income statements for the year 2019?

Ans: $ ________________

  1. What is the cash amount paid for income taxes for the year 2019?

Ans: $ ________________

c.   How does depreciation affect deferred tax account during 2019?

Deferred tax asset           Deferred tax liability                  (Choose one)

Increase               Decrease                                     (Choose one)

by the amount of $ ________________

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ekkarill92 answered 1 year ago
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