[accthelp]

The Armor Co. reported Deferred Tax Liability of $4,000 on 12/31/00 and $7,000 on 12/31/01. The only timing difference in reporting to the IRS and shareholders relates to depreciation on a building. Armor reported building depreciation expense of $20,000 on its 2001 income statement. Armor’s tax rate is a constant 30%.
(a) How much building depreciation did Armor deduct on its tax return for 2001?
(b) What if anything appears on the 2001 statement reconciling NI to CFO as regards the Deferred Tax liability?
(c) Continuing with the above, the building was sold on 12/31/02. What was the deferred tax liability balance reported on the end 2002 balance sheet?

Can someone help me get started on this please?

[fbm]

a) Tax Return Depreciation: $23000
b) The depreciation: adjusted as an addition to NI
c) My guess is if the DTL effect of the depreciation started in 00' then upon sale it would be reversed back to the original amount

[morgaine300]

There is a big red announcement at the top of all homework help pages with our guidelines about posting homework questions. Both of you might want to read it.

fbm, please do not just give answers away to homework. We aren't here to do their homework for them, but rather to help them understand it and be able to do it themselves. As a general rule, just giving the answer away doesn't really help them learn anything, and therefore is not really helping them in the long run. We need to see that they've made an attempt to do it for themselves.