Determine a the temporary book-tax difference for the

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Reference no: EM13590785

Ayres Services acquired an asset for $80 million in 2011. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2011, 2012, 2013, and 2014 are as follows:
($ in millions)

2011 2012 2013 2014
Pretax accounting income $330 $350 $365 $400
Depreciation on the income statement 20 20 20 20
Depreciation on the tax return (25) (33) (15) (7)
Taxable income $325 $337 $370 $413

Required:

Determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Enter your answers in millions. Negative amounts should be indicated with a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 1 decimal place. Omit the "$" sign in your response.)

Beginning of End of End of End of End of End 2011 2011 2012 2013 2014
Temporary difference $ $ $ $ $
Deferred tax liability $ $ $ $ $

Reference no: EM13590785

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