The following information is available for New Company, which was formed on January1, 2011:Fiscal 2011—• Financial income was $500,000

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The following information is available for New Company, which was formed on January1, 2011:Fiscal 2011—• Financial income was $500,000.• New obtained a $90,000 service contract. The performance obligation was expected to besatisfied equally with the passage of time over the three-year contract period of 2011-2013;the entire contract amount was reported in the 2011 tax return because the client paid the fullbalance in advance.• New bought machinery for $100,000. Straight-line depreciation was applied assuming a4-year life and no salvage value; scheduled depreciation for tax purposes was to be reportedas follows: $45,000 in 2011, $35,000 in 2012, $15,000 in 2013, and $5,000 in 2014.• The corporate tax rate was 40%.Fiscal 2012—• Financial income was $500,000.• No changes occurred in the expected timing of previously identified temporary differences.• Warranty expense of $15,000 was incurred; it was to be reported in the tax return when paid,with payment not expected until fiscal 2014.• The corporate tax rate was 40%.Fiscal 2013—• Financial income was $500,000.• No changes occurred in the expected timing of previously identified temporary differences.• The corporate tax rate was 40%, but legislation was enacted that reduced the rate to 25%effective in 2014.Fiscal 2014—• Financial income was $500,000.• No changes occurred in the expected timing of previously identified temporary differences.• The corporate tax rate was 25%, as per legislation enacted in the prior year.RequirementsPrepare each of the following for fiscal years 2011 through 2014, assuming management has noconcerns about the recoverability of any deferred tax assets (i.e., management believes it to bemore likely than not that any deferred tax assets will be recovered):1. New Company’s year-end income tax accrual.2. New Company’s partial income statement beginning with “Income before Income Taxes.”