Business, 21.07.2021 17:50 Dragonskeld

Ayres Services acquired an asset for $224 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the assetâ€™s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions)
2021 2022 2023 2024
Pretax accounting income $420 $440 $455 $490
Depreciation on the income statement 56 56 56 56
Depreciation on the tax return (67) (99) (33) (25)
Taxable income $409 $397 $478 $521

Required:
For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account.

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Ayres Services acquired an asset for $224 million in 2021. The asset is depreciated for financial re...

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