Timber Products recently purchased new machinery at a cost of $450,000. Management estimates that the equipment will have a useful life of 15 years and no salvage value at the end of the period. If the straight-line depreciation method is used for financial reporting, calculate:
a) Annual depreciation expense.
b) Accumulated depreciation at the end of year 1 and year 2.
c) The balance sheet account: fixed assets (net), at the end of years 1 and 2. Use the following information to answer parts (d) and (e): o Assume depreciation expense for tax purposes in year 1 is $45,000 o Assume the tax rate is 30% o
d) How much will depreciation expense reported for tax purposes in year 1 exceed depreciation expense reported in the financial statements in year 1
e) The difference between taxes actually paid in year1 and tax expense reported in the financial statements in year 1.