Snifful Industries Has a Depreciable Asset That Is Estimated for Accounting

question 29

Multiple Choice

Snifful Industries has a depreciable asset that is estimated for accounting purposes to have a useful life of 7 years.For taxation purposes the useful life is 3 years.The asset was purchased at the beginning of year 1,there is no residual value,and the straight-line method of depreciation is used for both tax and accounting purposes.The tax rate is 30% and the cost of the asset is $210 000.What is the amount of the deferred tax liability account generated by this asset at the end of years 2,3 and 4?

• A) End of year 2: $24 000; year 3: $36 000; year 4: $27 000
• B) End of year 2: $80 000; year 3: $120 000; year 4: $90 000
• C) End of year 2: $12 000; year 3: $24 000; year 4: $36 000
• D) End of year 2: $12 000; year 3: $12 000; year 4: $(9000)

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Definitions:

Streetwalkers

A term referring to sex workers who offer their services in public places, typically on the streets.

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Emotional work involves managing one's emotions or the emotions of others to fulfill the emotional requirements of a job, relationship, or social situation.

Call Girls

Female sex workers who arrange their meetings with clients through phone calls or digital messages, as opposed to working in public places.

Masturbation

The sexual stimulation of one's own genitals for sexual arousal or pleasure, often to the point of orgasm.