Red, Incorporated has book income of $500,000 before federal income tax expense which includes $10,000 fines paid to the federal government and $40,000 capital gains. Its book income also includes a $20,000 bad debt expense, determined by the allowance method. Actual write offs this year were $30,000. Based only on this information, compute Red's deferred tax asset or deferred tax liability, if any. O $2,100 Deferred tax asset. $2,100 Deferred tax liability. O $6,300 Deferred tax asset. O $10,500 Deferred tax liability.
Red, Incorporated has book income of $500,000 before federal income tax expense which includes $10,000 fines paid to the federal government and $40,000 capital gains. Its book income also includes a $20,000 bad debt expense, determined by the allowance method. Actual write offs this year were $30,000. Based only on this information, compute Red's deferred tax asset or deferred tax liability, if any. O $2,100 Deferred tax asset. $2,100 Deferred tax liability. O $6,300 Deferred tax asset. O $10,500 Deferred tax liability.
Chapter14: Taxes On The Financial Statements
Section: Chapter Questions
Problem 22CE
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT