What is the balance at the end of year 2 of kellans

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Question

At the beginning Of Year 1, Kellan Company purchases a machine costing $6,000 with a 3-year estimated service life and no salvage value. For financial reporting (book) purposes, Kellan uses straight-line depreciation with a 3-year life.

For income tax reporting, the machine is depreciated with a 2-year life. The machine is used to manufacture a product that will generate annual revenue of $5,000 for three years; all repairs are provided in Year 3. The tax rate is 40% in all three years. What is the balance at the end of Year 2 of Kellan's deferred tax asset and deferred tax liability?

Reference no: EM132319199

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