Now, let's take a look at what happens if we use different depreciation methods for income reporting and for tax purposes. So that will be the following example. So we have equipment, With the cost of $36,000. And then we have two methods. Now for income we use straight line, and again, it's for 4 years. Straight line for income, and that is how much? So we just divide 36 by 4, so this is going to be $9,000 a year. And for tax purposes, We use the sum of years digit, or accelerated method. So we take 1 + 2 + 3 + 4, these are sum of the years, this is 10. So in the first year we would use 40%, in the second year 30%, because we go backwards. The tax rate, we will use 40%, and then see what happens. So the first table, I'll put a line here, let's say this is the year 2011, 2012, 2013, and this 2014. And we create a table, so this is pretax income, and now everything but depreciation. And now straight line depreciation. And then this will be sum of years digit depreciation. And then, in red, I would put, Temporary difference. Let's see what happens. I'll put some numbers. Numbers are there just for illustrative purposes. Pretax here, 30,000, 40,000, 20,000, and then 25,000. Now, straight line depreciation, it's the same of 9,000, 9 here, 9 here, 9, and then 9. But with sum of years digits, we have different. So 40% of this, 36, so in the first year, we put 14,400, then 10,800, then 7,200, and then the final, just 3,600. And then we see the difference, so with difference straight line versus sum of years digits. So here it's 5,400, this is 1,800. But here already it goes back to the black. So here we have 1,800, and here we have 5,400. Again, over time, if we were to create the account for the cumulative 4 years, that would not have existed. But let's see what happens with our accounts over this period of time. So we introduce the following account, this is going to be income tax expense. Then, there will be deferred, Income tax, and then income tax payable. So we will see what happens with all these accounts over time. And that will be sort of similar to what we had before, but a little bit more pronounced. Well, first of all, let's start with year 2011. So it's easy to calculate the income tax expense. So we have pretax income, this is 30,000, multiplied by 40%. So we get the first number here, income tax expense, $12,000. Now, see what happens. Well, we have to calculate income tax payable. And income tax payable, we have 30 here, but then from this we have to subtract 5,400, that gives us 2,660, and then multiply that by 40%. So I will put like this, this is this less this. 24,600 times 40%, and that gives you 9,840. Then the difference we put here, deferred interest tax is $2,160. So this is the result of year 2011. Now, for all other years, I will first calculate this. So this is 2012, this is 2013. And this is 2014, our final year, and that ends up. Now, all these numbers are very clear. So we will have here 16,000, Here 8,000, And here 10,000, simple as that. So we just take these numbers and multiply by 40%. For this part, what we do though, we take this number plus this difference, this number plus this is different. So here we take, for example, 38,200, and multiply that by 40%. And that gives us the amount of 15,280. And then the next amount is 8,720, and then finally 12,160. And now we see what happens. That first this difference is 720 here, then in this case this 720 shows up on this side, and this 2,160 here shows on this side. So you can see that over time this deferred income tax account, so let me put it to be sure like this. So this is the account that we're mostly interested in. So first it's being credited twice, and then it's being debited twice, and over all life of this equipment, this difference disappears, the balance is zero. So you'll see that for the most trivial case of this equipment, we're just comparing two kinds, two methods of depreciation, and we still have some, well, straight forward, but cumbersome calculation. You can imagine what happens when you've got lots of pieces of equipment, and when you use different methods of depreciation. That's why I said that even technically the proper treatment of taxes poses sort of a challenge. Now, here we have finally arrived at the end of the second week. We've covered long-term assets and liabilities, and we saw some specific ways that bonds, stocks, taxes are treated. So there are plenty of assignments for this week and the corresponding quizzes, so I wish you good luck with all these assignments. And I will see you next week, when we'll talk about the statement of cash flows and of the analysis of financial statements.