FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Holden Company reported the following net income before taxes and
depreciation for the years indicated.
2019: $100,000 2020: $70,000 2021: $120,000
The Company purchased assets costing $120,000 on January 1, 2019. The
assets have a three year useful life and no salvage value. For tax purposes
the Company used an acceptable accelerated depreciation method that
resulted in depreciation expense of $55,000; $40,000; and $25,000 for the
three years respectively. For financial reporting purposes the straight-line
method was used. A 20% tax rate was in effect for the three years.

Instructions:
Prepare the necessary calculations and make the end of year entries for the
Holden Company for the years 2019, 2020, 2021.

Holden Company reported the following net income before taxes and
depreciation for the years indicated.
2019: $100,000 2020: $70,000 2021: $120,000
The Company purchased assets costing $120,000 on January 1, 2019. The
assets have a three year useful life and no salvage value. For tax purposes
the Company used an acceptable accelerated depreciation method that
resulted in depreciation expense of $55,000; $40,000; and $25,000 for the
three years respectively. For financial reporting purposes the straight-line
method was used. A 20% tax rate was in effect for the three years.
Instructions:
Prepare the necessary calculations and make the end of year entries for the
Holden Company for the years 2019, 2020, 2021.
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Transcribed Image Text:Holden Company reported the following net income before taxes and depreciation for the years indicated. 2019: $100,000 2020: $70,000 2021: $120,000 The Company purchased assets costing $120,000 on January 1, 2019. The assets have a three year useful life and no salvage value. For tax purposes the Company used an acceptable accelerated depreciation method that resulted in depreciation expense of $55,000; $40,000; and $25,000 for the three years respectively. For financial reporting purposes the straight-line method was used. A 20% tax rate was in effect for the three years. Instructions: Prepare the necessary calculations and make the end of year entries for the Holden Company for the years 2019, 2020, 2021.
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