Part 1 Fresno Transportation owns a fleet of 50 semi-trucks. The original cost of the...
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Accounting
Part 1
Fresno
Transportation owns a fleet of
50
semi-trucks. The original cost of the fleet was
$7,500,000.
Fresno
uses straight-line depreciation for the fleet for accounting purposes, and MACRS depreciation for tax purposes. The company had a deferred tax liability balance of
$220,000
at the end of fiscal year
2017
related to the fleet.
At the end of fiscal year
2018,
the GAAP book value of the fleet was
$6,230,000,
while the tax book value was
$5,610,000.
Fresno's
taxable income for fiscal year
2018
was
$6,400,000.
Its tax rate was
40%.
Requirements
1.
Calculate the deferred tax liability related to the fleet as of the end of fiscal year
2018.
2.
Record the tax accrual for
2018
as of the end of fiscal year
2018.
Answer & Explanation
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