Question

Lehman Corporation purchased a machine on January 2, 2013, for $3,000,000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes:

2013 $600,000 2016 $345,000 2014 960,000 2017 345,000 2015 576,000 2018 174,000 Assuming an income tax rate of 30% for all years, the net deferred tax liability that should be reflected on Lehman's balance sheet at December 31, 2014 be Deferred Tax Liability Current Noncurrent a. $100,800 $7,200 b. $108,000 $0 c. $0 $108,000 d. $7,200 $100,800

Answer 1

correct Option is c) $0 $108,000

Step-by-step explanation:

given data

Machinery Purchases = $3,000,000

Estimated Life = 5 years

Income Tax Rate = 30%

solution

we get here net deferred tax liability that is reflect on balance sheet and

we know here that MACRS amounts that will be Deduct for Tax Purposes is 2013 = $600,000

2014 = $960,000

so Deferred Tax Liability will be

Deferred Tax Liability = 30% × ($960,000 - $600,000)

Deferred Tax Liability = $108,000 Noncurrent

correct Option is c) $0 $108,000