Assume Maple Corp. has just completed the third year of itsexistence (year 3). The table below indicates Maple’s ending bookinventory for each year and the additional §263A costs it wasrequired to include in its ending inventory. Maple immediatelyexpensed these costs for book purposes. In year 2, Maple sold allof its year 1 ending inventory, and in year 3 it sold all of itsyear 2 ending inventory. Year 1 Year 2 Year 3 Ending book inventory$ 2,870,000 $ 3,242,500 $ 2,517,500 Additional §263A costs 55,00074,250 56,250 Ending tax inventory $ 2,925,000 $ 3,316,750 $2,573,750 Required: What book-tax difference associated with itsinventory did Maple report in year 1? Was the difference favorableor unfavorable? Was it permanent or temporary? What book-taxdifference associated with its inventory did Maple report in year2? Was the difference favorable or unfavorable? Was it permanent ortemporary? What book-tax difference associated with its inventorydid Maple report in year 3? Was the difference favorable orunfavorable? Was it permanent or temporary?
