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Use the following information for questions 15-17. Costco Inc. began operations on January 1, YR11 and purchased a delivery vehicle on that date for $150. The vehicle has an estimated life of three (3) years with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and accelerated depreciation is used for tax purposes. A comparison of book and tax depreciation appears below. Year YR11 YR12 YR13 Total Financial Tax Depreciation Depreciation 50 80 50 60 50 10 150 150 Tax Credit: Under current tax law the company earned an investment tax credit of $15 related to the purchase of the vehicle. The company has elected to use the Flow-Through method to account for the investment tax credit. Deposit: During YR11 the company made a tax deposit for estimated Federal income tax totaling $10. The journal entry was - 10 Income Tax Payable Cash 10 Taxable Income: Taxable Income for the year ended December 31, YR11 was $200. Tax Rates: Federal income tax rates are as follows: 30% for YR11; 40% for YR12; and 50% for YR13. 17. Assume the same facts as above except that the company elected to use the Deferred method to account for the investment tax credit. After all adjustments, the December 31, YR11 general ledger balance for the Deferred Tax Credit account should be: a. $0 b. $5 cr. c. $10 cr. d. $15 cr. e. None of the above. Use the following information for questions 15-17. Costco Inc. began operations on January 1, YR11 and purchased a delivery vehicle on that date for $150. The vehicle has an estimated life of three (3) years with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and accelerated depreciation is used for tax purposes. A comparison of book and tax depreciation appears below. Year YR11 YR12 YR13 Total Financial Tax Depreciation Depreciation 50 80 50 60 50 10 150 150 Tax Credit: Under current tax law the company earned an investment tax credit of $15 related to the purchase of the vehicle. The company has elected to use the Flow-Through method to account for the investment tax credit. Deposit: During YR11 the company made a tax deposit for estimated Federal income tax totaling $10. The journal entry was - 10 Income Tax Payable Cash 10 Taxable Income: Taxable Income for the year ended December 31, YR11 was $200. Tax Rates: Federal income tax rates are as follows: 30% for YR11; 40% for YR12; and 50% for YR13. 17. Assume the same facts as above except that the company elected to use the Deferred method to account for the investment tax credit. After all adjustments, the December 31, YR11 general ledger balance for the Deferred Tax Credit account should be: a. $0 b. $5 cr. c. $10 cr. d. $15 cr. e. None of the above

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