Tissues Ltd Has a Depreciable Asset That Is Estimated for Accounting

question 10

Multiple Choice

Tissues Ltd has a depreciable asset that is estimated for accounting purposes to have a useful life of 8 years.For taxation purposes the useful life is 5 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 per cent and the cost of the asset is $100,000.What is the amount of the deferred tax liability account generated by this asset at the end of years 1,2 and 3?

• A) End of year 1: $0; Year 2: $2,250; Year 3: $4,500
• B) End of year 1: $7,500; Year 2: $15,000; Year 3: $22,500
• C) End of year 1: $6,750; Year 2: $4,500; Year 3: $2,250
• D) End of year 1: $2,250; Year 2: $4,500; Year 3: $6,750
• E) None of the given answers.

---

Definitions:

Sexually Transmitted Infections

Infections that are primarily spread through sexual contact; includes HIV, chlamydia, gonorrhea, and syphilis.

HPV Infection

An infection by the human papillomavirus, a group of viruses that can cause warts and are associated with various cancers.

HIV Screening

The process of testing for the presence of the Human Immunodeficiency Virus in an individual's body.

Anaphylactic Reaction

A severe, potentially life-threatening allergic reaction that can occur rapidly.