Question

In: Accounting

A reconciliation of Sunland Company's pretax accounting income with its taxable income for 2021, its first...

A reconciliation of Sunland Company's pretax accounting income with its taxable income for 2021, its first year of operations, is as follows:

Pretax accounting income

$3900000

Excess tax depreciation

(189000)

Taxable income

$3711000

The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 30% in 2021, 25% in 2022 and 2023, and 20% in 2024. The total deferred tax liability to be reported on Sunland's balance sheet at December 31, 2021, is

A

$37800.

B

$56700.

C

$47250.

D

$44100.

Expert Solution

Answer- Option D $ 44,100

Total Excess Tax Deprecation= 189,000

Annual tax depreciation for 3 Years =189,000/3

=63,000

Year	Depreciation	Tax Rate	Deferred tax
2,022	63,000	25%	15,750
2,023	63,000	25%	15,750
2,024	63,000	20%	12,600
Total	189,000		44,100

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