The following information is available for the first three years of operations for Cooper Company:
The following information is available for the first three years of operations for Cooper Company:
1. Year Taxable Income
2012 $500,000
2013 360,000
2014 400,000
2. On January 2, 2012, heavy equipment costing $600,000 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
2012 2013 2014 2015 Total
$198,000 $270,000 $90,000 $42,000 $600,000
3. On January 2, 2013, $270,000 was collected in advance for rental of a building for a three-year period. The entire $270,000 was reported as taxable income in 2013, but $180,000 of the $240,000 was reported as unearned revenue at December 31, 2013 for book purposes.
4. The enacted tax rates are 40% for all years.
Required:
(a) Prepare a schedule comparing depreciation for financial reporting and tax purposes.
(b) Determine the deferred tax (asset) or liability at the end of 2012.
(c) Prepare a schedule of future taxable and (deductible) amounts at the end of 2013.
(d) Prepare a schedule of the deferred tax (asset) and liability at the end of 2013.