Multiple temporary differences defferred taxes
Coltsindy18 asked Multiple temporary differences.
The following information is available for the first three years of operations for Cooper Company:
1. Year Taxable Income
2010 $500,000
2011 330,000
2012 400,000
2. On January 2, 2010, heavy equipment costing $600,000 was purchased. The equipment had a life of 5 years and no salvage value. The straight line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below:
Tax Depreciation
2010 2011 2012 2013 Total
$198,000 $270,000 $90,000 $42,000 $600,000
3. On January 2, 2011, $240,000 was collected in advance for rental of a building for a three year period. The entire $240,000 was reported as taxable income in 2011, but $160,000 of the $240,000 was reported as unearned revenue at December 31, 2011 for book purposes.
4. The enacted tax rates are 40% for all years.
Instructions
(b) Determine the deferred tax (asset) or liability at the end of 2010.
(c) Prepare a schedule of future taxable and (deductible) amounts at the end of 2011.
(d) Prepare a schedule of the deferred tax (asset) and liability at the end of 2011.
(e) Compute the net deferred tax expense (benefit) for 2011