Solution-Compute the income tax payable and deferred tax

Compute the income tax payable and deferred tax liability

Reference no: EM132676915

Question - Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $820,000 and with an expected useful life of 4 years and no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $940,000, which includes interest revenue of $27,000 from municipal bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%.

Required - Compute the income tax payable and deferred tax liability.

Reference no: EM132676915

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Compute the income tax payable and deferred tax liability

Reference no: EM132676915

Reference no: EM132676915

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