13. For calendar year 2018, King Corp. reported depreciation of $1,600,000 in it

Question

13. For calendar year 2018, King Corp. reported depreciation of $1,600,000 in its income statement. On its 2018 income tax return, King reported depreciation of $2,400,000. King's income statement also included $300,000 accrued warranty expense that will be deducted for tax purposes when paid. Kane's enacted tax rates are 30% for 2018 and 2019, and 24% for 2020 and 2021. The depreciation difference and warranty expense will reverse over the next three years as follows: 2019 2020 2021 $320,000 280,000 200,000 60,000 100,000 140,000

Explanation / Answer

Depreciation Difference Warranty Expense Difference Tax Rate Deffered Tax 2019 $320,000 $60,000 $260,000 30.00% $78,000 2020 $280,000 $100,000 $180,000 24.00% $43,200 2021 $200,000 $140,000 $60,000 24.00% $14,400 $800,000 $300,000 $135,600

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