A ) B) If a corporation’s tax return shows taxable income of $74,000 for Year 2

Question

A )

B) If a corporation’s tax return shows taxable income of $74,000 for Year 2 and a tax rate of 25%, the amount that will appear on the December 31 Year 2 statement of financial position for “Income tax payable” if the company has made estimated tax payments of $12,000 for Year 2 will be?

C) If a $56,000 balance in the Deferred Tax Asset account were calculated using a 25% rate, the underlying temporary difference would amount to?

D) If total income tax expense is $37,000 and deferred tax expense is $48,000, then the current portion of the total income tax expense is referred to as a current tax

is?

An income statement that reports current tax expense of $61,000 and a deferred tax benefit of $17,000 will report total income tax expense of?

Explanation / Answer

A. Total income tax expense = Current tax expense - Deferred tax benefit

= $61000 - $17000 = $44000

B. Income tax payable for Year 2 = (Taxable income x Tax rate) - Estimated tax payments

= ($74000 x 25%) - $12000 = $6500

C. Temporary difference = Deferred tax asset/ Tax rate

= $56000/ 25%

= $224000

D. Current tax = Total income tax expense - Deferred tax expense

= $37000 - $48000

= -$11000

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