Coco Ltd. purchased an equipment last year for $300,000. At that time, the Management estimated that the equipment will
Posted: Sun Jul 03, 2022 1:06 pm
Coco Ltd. purchased an equipment last year for $300,000. At thattime, the Management estimated that the equipment will have auseful life of five years with no salvage value at its end of life.The depreciation expense recorded for tax purposes is $72,000 thisyear (Year 2). Assume that the company uses the straight-linemethod of depreciation for reporting purposes.
a. Determine the amount of depreciation expense for reportingpurposes this year (Year 2). (4 marks)
b. Determine the net book value of the equipment reported on thebalance sheet at the end of this year (Year 2). (4 marks)
c. Is there a deferred tax asset or liability created as aresult of the depreciation recorded for tax and financial reportingpurposes? (3 marks)
d. Determine the amount that will be added to the deferred taxaccount arising from the result of the depreciation timingdifference. (4 marks)
a. Determine the amount of depreciation expense for reportingpurposes this year (Year 2). (4 marks)
b. Determine the net book value of the equipment reported on thebalance sheet at the end of this year (Year 2). (4 marks)
c. Is there a deferred tax asset or liability created as aresult of the depreciation recorded for tax and financial reportingpurposes? (3 marks)
d. Determine the amount that will be added to the deferred taxaccount arising from the result of the depreciation timingdifference. (4 marks)