Using DDB: | Yr. 1 | Yr. 2 | | Revenue | 15,000 | 15,000 | | Dep. | 4,000 | 1,333 | | Taxable Inc | 11,000 | 13,667 | | Taxes Pay | 3,300 | 4,100 |
Using SL: | Yr. 1 | Yr. 2 | | Revenue | 15,000 | 15,000 | | Dep. | 2,000 | 2,000 | | Pretax Inc | 13,000 | 13,000 | | Tax Exp | 3,900 | 3,900 |
Deferred taxes year 1 = 3,900 – 3,300 = 600 Deferred taxes year 2 = 3,900 – 4,100 + previously deferred taxes = -200 + 600 = 400 |
