In its first year of operations, Pioneer Natural reported pretax accounting income of $680 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $600 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be reduced under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be: Multiple Choice $200 million. $180 million. $240 million. $210 million.
In its first year of operations, Pioneer Natural reported pretax accounting income of $680 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $600 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be reduced under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be: Multiple Choice $200 million. $180 million. $240 million. $210 million.
Chapter14: Taxes On The Financial Statements
Section: Chapter Questions
Problem 4BCRQ
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17. In its first year of operations, Pioneer Natural reported pretax accounting income of $680 million for the current year.
Multiple Choice
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$200 million.
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$180 million.
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$240 million.
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$210 million.
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