g reported pretax accounting income of $860 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $1,140 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be reduced under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be:
Added by Ricky W.
Step 1
Step 1: Calculate the excess tax depreciation for the current year: Excess tax depreciation = $1,140 million / 3 = $380 million Show more…
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