Gire company began operations at the beginning of 2010 at

Question

Gire Company began operations at the beginning of 2010, at which time it purchased a depreciable asset for $60,000. For 2010 through 2013, the asset was depreciated on the straight-line basis over a four-year life (no residual value) for financial reporting. For income tax purposes the asset was depreciated using MACRS (200%, three-year life). For 2010 through 2013, the company reported pretax financial income and taxable income of the following amounts (the differences are due solely to the depreciation temporary differences):

 

Over the entire four year period, the company was subject to an income tax of 30% and no change in the tax rate had been enacted for future years.

Required:
1. Prepare a schedule that shows for each year, 2010 through 2013, the 

(a) MACRS depreciation, 

(b) Straight-line depreciation,

(c) Annual depreciation temporary difference, 

(d) Accumulated temporary difference at the end of each year.

2. Prepare the income tax journal entry at the end of 

(a) 2010, 

(b) 2011, 

(c) 2012, 

(d) 2013. (Round to the nearest dollar.)

3. Prepare the lower portion of the income statement for 

(a) 2010, 

(b) 2011, 

(c) 2012 

(d)2013.