The following information relates to Franklin Freightways for its first year of

Question

The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars):

The applicable tax rate is 40%. There are no other temporary or permanent differences.

Which of the following must Franklin Freightways disclose related to the income tax expense reported in the income statement ($ in millions)?

Only the current portion of tax expense of $66.

Only the total tax expense of $82.

Both the current portion of the tax expense of $66 and the deferred portion of the tax expense of $16.

None of these answer choices are correct.

Pretax accounting income: $200 Pretax accounting income included:         Overweight fines (not deductible for tax purposes)    5         Depreciation expense 70 Depreciation in the tax return using MACRS: 110

Explanation / Answer

both the current portion of the tax expense of 66 and the deferred portion of the tax expense of 16

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