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The long-term liabilities section of BSU Transportation's December 31, 2020, balance sheet included the following: a. A lease liability with 15 remaining lease payments of $38,000 each, due annually on January 1 : Lease liability Less: current portion $289,031 9,097$279,934 The incremental borrowing rate at the inception of the lease was 11% and the lessor's implicit rate, which was known by BSU Transportation, was 10%. b. A deferred income tax liability due to a single temporary difference. The only difference between BSU Transportation's taxable income and pretax accounting income is depreciation on a machine acquired on January 1, 2020, for $560,000. The machine's estimated useful life is five years, with no salvage value. Depreciation is computed using the straight-line method for financial reporting purposes and the MACRS method for tax purposes. Depreciation expense for tax and financial reporting purposes for 2021 through 2024 is as follows: The enacted federal income tax rates are 20% for 2020 and 25% for 2021 through 2024 . BSU Transportation had a deferred tax liability of $9,500 as of December 31,2020 . For the year ended December 31, 2021, BSU Transportation's income before income taxes was $960,000. On July 1, 2021, BSU Transportation issued $660,000 of 9% bonds. The bonds mature in 15 years, and interest is payable each January 1 and July 1 . The bonds were issued at a price to yield the investors 10% interest is payable each January 1 and July 1 . The bonds were issued at a price to yield the investors 10%. BSU Transportation records interest at the effective interest rate. Required: 1. Determine BSU Transportation's income tax expense, current and deferred, and net income for the year ended December 31, 2021 2. Determine BSU Transportation's interest expense for the year ended December 31, 2021. 3. Prepare the long-term liabilities section of BSU Transportation's December 31,2021 , balance sheet. Required 1 BSU Transportation Income Tax Expense and Net Income For the Year Ended December 31, 2021 Income before income taxes Income tax expense: Current Deferred Net income Required 2 BSU Transportation Calculation of Interest Expense For the Year Ended December 31, 2021 Lease obligation Bonds payable Total interest expense \begin{tabular}{|l|} \hline \\ \hline \\ \hline \\ \hline \end{tabular} Required 3 BSU Transportation Long-Term Liabilities Section of Balance Sheet December 31, 2021 Long-term liabilities: Lease liability Less: current portion Bonds payable, net Deferred tax liability Total long-term liabilities

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