A. The preparation of the Income Statements for Futabatei Enterprises for years 2014 and 2015 is as follows:
<h3>Income Statement </h3>
For years ended December 31 2014 and 2015
2014 2015
Revenues $200,000 $200,000
Operating expenses 130,000 130,000
Depreciation 3,000 3,000
Income before tax $127,000 $127,000
B. <u>Taxable Income for 2014 and 2015</u>:
2014 2015
Income before tax $127,000 $127,000
Depreciation 3,000 3,000
MACRS depreciation (5,400) (8,640)
Taxable income $124,600 $121,360
C. The total depreciation to be taken over the useful life of the delivery truck is as follows:
Book Tax
Total depreciation $21,000 $27,000
D. The depreciation for book and tax purposes are usually different over the useful life of an asset because of the different depreciation rates and methods. Companies usually favor one of the depreciation methods for accounting purposes, but they are taxed by a different depreciation method, especially the MACRS method.
<h3>Data and Calculations:</h3>
Cost of delivery truck = $27,000
Estimated useful life = 7 years
<h3>Straight-line Depreciation Method:</h3>
Estimated salvage value =$6,000
Depreciable amount = $21,000 ($27,000 - $6,000)
Annual Depreciation = $3,000 ($21,000/7)
<h3>MACRS Tax Rate Table:</h3>
First year = $5,400 ($27,000 x 20%)
Second year = $8,640 ($27,000 x 32%)
Third year = $5,184 ($27,000 x 19.20%)
Fourth year = $3,110 ($27,000 x 11.52%)
Fifth year = $3,110 ($27,000 x 11.52%)
Six year = $1,556 ($27,000 x 5.76%)
Learn more about depreciation differences for financial accounting and tax purposes at brainly.com/question/15874429
