Giada Foods reported $1,020 million in income before income taxes for 2016, its

Q: Giada Foods reported $1,020 million in income before income taxes for 2016, its

$56 million Tax depreciatio excceds by $140m the tax rate is 40% hence balance in the deferred tax liability in the december 31,2016 will be $140 m @40% = $56m

ID: 2446961 • Letter: G

Question

Giada Foods reported $1,020 million in income before income taxes for 2016, its first year of operations. Tax depreciation exceeded depreciation for financial reporting purposes by $140 million. The company also had non-tax-deductible expenses of $112 million relating to permanent differences. The income tax rate for 2016 was 35%, but the enacted rate for years after 2016 is 40%. The balance in the deferred tax liability in the December 31, 2016, balance sheet is:

$78 million.

$22 million.

$56 million.

$49 million.

Explanation / Answer

$56 million

Tax depreciatio excceds by $140m

the tax rate is 40%

hence balance in the deferred tax liability in the december 31,2016 will be $140 m @40% = $56m

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Giada Foods reported $1,020 million in income before income taxes for 2016, its

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