Lehman Corporation purchased a machine on January 2, 2011, for $2,000,000. The m

Question

          Lehman Corporation purchased a machine on January 2, 2011, for $2,000,000. 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:

2011             $400,000                        2014             $230,000

2012               640,000                        2015               230,000

2013               384,000                        2016               116,000

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, 2012, should be

Explanation / Answer

Lehman Corporation purchased a machine on January 2, 2009, for $2,000,000. 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:

2009             $400,000                        2012             $230,000

2010               640,000                        2013               230,000

2011               384,000                        2014               116,000

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, 2010, should be

                  Deferred Tax Liability     

            Current                Noncurrent

a.         $0                          $72,000-------SURE----------------ANSWER----100% CORRECT

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