At the end of 2020, its first year of operations, Tyre Recycling Inc. prepared the following reconciliation between pre-tax accounting income and taxable income: Pre-tax accounting income $ 300,000 Estimated lawsuit expense 750,000 Instalment sales profit (600,000) Taxable income 450,000 The estimated lawsuit expense of $750,000 will be deductible in 2022 when it is expected to be paid. The instalment sales profit will be collected at $300,000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense (current plus deferred) and deferred tax expense to be reported on the income statement is Select one: a. $90,000;($45,000). b. $135,000;$45,000. c. $150,000;$150,000. d. $300,000;$135,000. e. ($45,000);($45,000).
At the end of 2020, its first year of operations, Tyre Recycling Inc. prepared the following reconciliation between pre-tax accounting income and taxable income: Pre-tax accounting income $ 300,000 Estimated lawsuit expense 750,000 Instalment sales profit (600,000) Taxable income 450,000 The estimated lawsuit expense of $750,000 will be deductible in 2022 when it is expected to be paid. The instalment sales profit will be collected at $300,000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense (current plus deferred) and deferred tax expense to be reported on the income statement is Select one: a. $90,000;($45,000). b. $135,000;$45,000. c. $150,000;$150,000. d. $300,000;$135,000. e. ($45,000);($45,000).
Chapter6: Deductions And Losses: In General
Section: Chapter Questions
Problem 56P
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Question
At the end of 2020, its first year of operations, Tyre Recycling Inc. prepared the following reconciliation between pre-tax accounting income and taxable income:
|
Pre-tax accounting income |
$ 300,000 |
|
Estimated lawsuit expense |
750,000 |
|
Instalment sales profit |
(600,000) |
|
Taxable income |
450,000 |
The estimated lawsuit expense of $750,000 will be deductible in 2022 when it is expected to be paid. The instalment sales profit will be collected at $300,000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense (current plus deferred) and
Select one:
a.
$90,000;($45,000).
b.
$135,000;$45,000.
c.
$150,000;$150,000.
d.
$300,000;$135,000.
e.
($45,000);($45,000).
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