Lewis Inc. began operations in January 2013. For certain of its property sales, Lewis recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Lewis recognizes income when it collects cash from the buyer's installment payments.
In 2013, Lewis had $600 million in sales of this type. Scheduled collections for these sales are as follows:
Assume that Lewis has a 40% income tax rate and that there were no other differences in income for financial statement and tax purposes.
Ignoring operating expenses, what deferred tax liability would Lewis report in its year-end 2013 balance sheet?
Each of the four independent situations below describes a lease requiring annual lease payments of $30,000.
For each situation, determine the appropriate lease classification by the lessee and indicate why.