The following information is available for the first three years of operations for Cullumber Company:
1.
Year Taxable Income
2024 $530,000
2025 380,000
2026 430,000
2. On January 2, 2024, heavy equipment costing $630,000 was purchased. The equipment had a life of 5 years and no salvage value.
The straight-line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below:
Tax Depreciation
2024 2025 2026 2027 Total
$207,900 $283,500 $94,500 $44,100 $630,000
3.
On January 2, 2025, $309,000 was collected in advance for rental of a building for a three-year period. The entire $309,000
was reported as taxable income in 2025, but $206,000 of the $309,000 was reported as unearned revenue at December 31,
2025 for book purposes.
4. The enacted tax rates are 20% for all years.
