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1. The firm leased furniture for 3 years. The lease is classified as an operating lease...

1. The firm leased furniture for 3 years. The lease is classified as an operating lease and required payments of $50,000 at the beginning of year 1, $20,000 at the beginning of year 2 and $20,000 at the beginning of year 3.

2. Purchased a municipal bond for its face value of $400,000. The bond has a coupon rate of 6% (payable December 31 of each year), and a five-year maturity. The bond is accounted for as a “held to maturity” debt security.

Pre tax accounting income year 1: $900,000

Pre tax accounting income year 2: $1,200,000

Assume the following tax regulations: Lease payments are deductible when made and Interest income on the municipal bond is tax exempt.

Tax rate of 30%.

Taxable income?Deferred Tax asset? Deffered Tax liability at the end of year 1 and 2.

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Please find following for Taxable income, Deferred Tax Asset, Deffered Tax Liability at the end of year 1 and 2 -

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