Mansfield Corporation purchased a new piece of equipment at the beginning of Year 1 for $1,060,000. The expected life of the asset is 25 years with no residual value. The company uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax purposes (the accelerated method results in $106,000 of depreciation each year). The company's federal income tax rate is 21%. The company determined its income tax obligations for Year 1 and Year 2 were $405,000 and $640,000, respectively.
1) Compute the deferred income tax amount reported on the balance sheet for each year.
2) Is the deferred income tax a liability or an asset?
3)Compute income tax expense for each year.
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Mansfield Corporation purchased a new piece of equipment at the beginning of Year 1 for $1,060,000....
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