Question

Casinos recently acquired a newly built hotel and casino in Atlantic City. The cost of the complex was $ 4 comma 200 comma 000 with a ​ 6-year useful life and no residual value expected. Milton depreciates its buildings using the​ straight-line method for financial reporting and an accelerated method for tax purposes. The tax depreciation percentages for the first 2 years are​ 20% and​ 32%, respectively. Milton is subject to a 40 % income tax rate. Read the requirements LOADING.... Requirement a. Assuming that Year 2 income before tax and depreciation is $ 3 comma 900 comma 000​, determine the Year 2 income tax​ payable, the deferred tax​ provision, and income tax expense. Begin by completing the table below to compute book and tax depreciation through Year 2.

Answer 1

VALUE OF COMPLEX	4,200,000.00
DEPRECIATION FOFR FIRST YEAR	840,000.00
(4200000*20/100)
WDV FOR SECOND YEAR	3,360,000.00
DEPRECIATION FOFR SECOND YEAR	1,075,200.00
(3360000*32/100)
WDV FOR THIRD YEAR	2,284,800.00
TAXABLE INCOME BEFORE DEPRCIATION	3,900,000.00
TAXABLE INCOME AFTER DEPRECIATION	2,824,800.00
TAX ON ABOVE	1,129,920.00
INCOME TAX EXPENSES	1,129,920.00
DEPRECIATION AS PER BOOKS
VALUE OF COMPLEX	4,200,000.00
DEPRECIATION FOFR FIRST YEAR	700,000.00
WDV FOR SECOND YEAR	3,500,000.00
DEPRECIATION FOFR SECOND YEAR	700,000.00
WDV FOR THIRD YEAR	2,800,000.00