For calendar 2020, Melvin Corp. reported depreciation expense of $ 800,000 on its income statement, but on its 2020 income tax return, Melvin claimed CCA of $ 1,200,000. The 2020 income statement also included $ 150,000 in accrued warranty expense that will be deducted for tax purposes when paid. Melvin's income tax rates are 30% for 2020 and 2021, and 24% for 2022 and 2023. The depreciation difference and warranty expense will reverse over the next three years as follows: $\begin{array}{cccc}
& \text { \underline{\text{ Depreciation Difference }}} & & \text { \underline{\text{ Warranty Expense }} } \
2021 & \$ 160,000 & & \$ 30,000 \
2022 & 140,000 & & 50,000 \
2023 & \underline{100,000} & & \underline{\text{ 70,000}} \
& \$ 400,000 & & \$ 150,000
\end{array}$ These were Melvin's only reversible differences. At December 31, 2020, Melvin's deferred tax liability should be

Question

For calendar 2020, Melvin Corp. reported depreciation expense of $ 800,000 on its income statement, but on its 2020 income tax return, Melvin claimed CCA of $ 1,200,000. The 2020 income statement also included $ 150,000 in accrued warranty expense that will be deducted for tax purposes when paid. Melvin's income tax rates are 30% for 2020 and 2021, and 24% for 2022 and 2023. The depreciation difference and warranty expense will reverse over the next three years as follows: $\begin{array}{cccc} 
& \text { \underline{\text{ Depreciation Difference  }}} & & \text { \underline{\text{ Warranty Expense }}  } \
2021 & \$ 160,000 & & \$ 30,000 \
2022 & 140,000 & & 50,000 \
2023 & \underline{100,000} & & \underline{\text{ 70,000}}  \
& \$ 400,000 & & \$ 150,000
\end{array}$ These were Melvin's only reversible differences. At December 31, 2020, Melvin's deferred tax liability should be

Quizplus · Accepted Answer

The Answer of For calendar 2020, Melvin Corp. reported depreciation expense of $ 800,000 on its income statement, but on its 2020 income tax return, Melvin claimed CCA of $ 1,200,000. The 2020 income statement also included $ 150,000 in accrued warranty expense that will be deducted for tax purposes when paid. Melvin's income tax rates are 30% for 2020 and 2021, and 24% for 2022 and 2023. The depreciation difference and warranty expense will reverse over the next three years as follows: $\begin{array}{cccc} 
& \text { \underline{\text{ Depreciation Difference  }}} & & \text { \underline{\text{ Warranty Expense }}  } \
2021 & \$ 160,000 & & \$ 30,000 \
2022 & 140,000 & & 50,000 \
2023 & \underline{100,000} & & \underline{\text{ 70,000}}  \
& \$ 400,000 & & \$ 150,000
\end{array}$ These were Melvin's only reversible differences. At December 31, 2020, Melvin's deferred tax liability should be

For Calendar 2020, Melvin Corp These Were Melvin's Only Reversible Differences