Solution-Compute the amount of the deferred tax liability

Compute the amount of the deferred tax liability

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Reference no: EM132432121

Question - In 2018 XYZ purchased equipment for $9,000 that will be depreciated for financial statements and tax purposes as follows:

	2018	2019	2020
Financial Statement	$3,000	$3,000	$3,000
Tax Return	$5,000	$2,500	$1,500

Compute the amount of the Deferred Tax Liability as of 12f31f18 under the following three independent assumptions:

Assumption 1 - The tax rate in 2018 is 30% and this rate is expected to remain constant for all future tax years.

Assumption 2 - The tax rate in 2018 is 30% but the expected tax rate for 2019 and 2020 is 20%.

Assumption 3 - The tax rate in 2018 is 30% but the expected tax rate for 2019 is 20%. The tax rate for 2020 is expected to return to the "normal" rate of 30%.

Reference no: EM132432121

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Compute the amount of the deferred tax liability

Reference no: EM132432121

Reference no: EM132432121

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