On July 1, 2023, Lorty Inc. sells equipment for $126,000. The capital cost of the equipment is $111,000 and the carrying value for accounting purposes is $93,000. For equipment was included in Class 8. The UCC balance in the class on January 1, 2023 was $103,000. There were no other additions or dispositions to the class during the taxation year ending December 31, 2023. Indicate the reconciliation adjustments that would be required to Lorty Inc.'s accounting income for 2023.

On July 1, 2023, Lorty Inc. sells equipment for $126,000. The capital cost of the equipment is $111,000 and the carrying value for accounting purposes is $93,000. For equipment was included in Class 8. The UCC balance in the class on January 1, 2023 was $103,000. There were no other additions or dispositions to the class during the taxation year ending December 31, 2023. Indicate the reconciliation adjustments that would be required to Lorty Inc.'s accounting income for 2023.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 5MC: At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial...

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At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?
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