Question

Same information as the previous question Company A started business on January 1, 20X1, and bought the following piece of equipment. Cost of asset $150,000 Useful life 3 Tax rate 21% 20X1 estimated tax payment 1,800 Depreciation for book and tax purposes is as follows: Book Tax 20X1 40,000 100,000 20X2 40,000 20,000 20X3 40,000 0 20X1 income statement information: Sales 638,000 Expenses (does not include depreciation expense and tax expense) 510,000 What the ending balance of deferred taxes payable as of December 31, 20X1?

Answer 1

Answer:

$12,600

Explanation:

Excess tax depreciation 20X1 = 100,000 - 40,000

Excess tax depreciation 20X1 = $60,000

Tax rate = 21%

Ending balance of deferred taxes payable = Excess tax depreciation 20X1 * Tax rate

Ending balance of deferred taxes payable = $60,000*21%

Ending balance of deferred taxes payable = $12,600

So, the ending balance of deferred taxes payable as of December 31, 20X1 is $12,600.