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Your client, a publically-traded company, in 2019 acquires $2.5 million of fixed assets. All of these...

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Accounting

Your client, a publically-traded company, in 2019 acquires $2.5million of fixed assets. All of these assets are 5 year class MACRSproperty. The first three years of MACRS depreciation are: FirstYear $625,000; Second Year 750,000; Third Year $450,000. For bookpurposes, the company uses a 10 year useful life, straight-linedepreciation with no salvage value. Obviously, these assets willcreate a DTL. How should the DTL be presented for these assets atthe end of year 2? Ignore partial year depreciation and assume a21% tax rate.
a. $105, 000 Long-Term; $78,750 Short-Term
b. $78,750 Long-Term $105,000 Short-Term
c. $183,750 Long-Term
d. None of the above

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Lets first understand the concept of Deferred Tax As per accounting standard the income tax expenses should be treated just like any other expenses on accrual basis irrespective of the timing of payment of tax Tax expenses for the period to be recognized consist of current tax and deferred tax Current Tax Current tax is the amount of income tax determined to be payable recoverable in respect of the taxable    See Answer
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Your client, a publically-traded company, in 2019 acquires $2.5million of fixed assets. All of these assets are 5 year class MACRSproperty. The first three years of MACRS depreciation are: FirstYear $625,000; Second Year 750,000; Third Year $450,000. For bookpurposes, the company uses a 10 year useful life, straight-linedepreciation with no salvage value. Obviously, these assets willcreate a DTL. How should the DTL be presented for these assets atthe end of year 2? Ignore partial year depreciation and assume a21% tax rate.a. $105, 000 Long-Term; $78,750 Short-Termb. $78,750 Long-Term $105,000 Short-Termc. $183,750 Long-Termd. None of the above

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