(a) The following facts relate to Pina Corporation. 1. Deferred tax liability, J
ID: 2532200 • Letter: #
Question
(a)
The following facts relate to Pina Corporation.1. Deferred tax liability, January 1, 2017, $73,000. 2. Deferred tax asset, January 1, 2017, $0. 3. Taxable income for 2017, $185,000. 4. Pretax financial income for 2017, $422,000. 5. Cumulative temporary difference at December 31, 2017, giving rise to future taxable amounts, $484,000. 6. Cumulative temporary difference at December 31, 2017, giving rise to future deductible amounts, $73,000. 7. Tax rate for all years, 40%. 8. The company is expected to operate profitably in the future.
Explanation / Answer
Pretax financial income 422000 Less: Temporary difference giving rise to future taxable amounts 301500 =484000-(73000/40%) Add: Temporary difference giving rise to future deductible amounts 73000 Taxable amount 193500 Tax rate 40% Income taxes payable 77400
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