Stone Co. reported $225,000 in income before income taxes for 2017. Stone's 2017 book depreciation exceeded its tax depreciation by $25,000 due to partial reversal of accelerated depreciation in a previous year. Stone also accrued $20,000 of estimated warranty expenses on 12/31/17. Stone's tax rate for 2017 (and previous years) was 40%, and the enacted rate for years after 2017 is 35%. In its 2017 income statement, what amount of should Stone report for Income Tax Expense? Select one: a. $98,000 b. $90,000 c. $91,000 d. $108,000 e. $101,000

Stone Co. reported $225,000 in income before income taxes for 2017. Stone's 2017 book depreciation exceeded its tax depreciation by $25,000 due to partial reversal of accelerated depreciation in a previous year. Stone also accrued $20,000 of estimated warranty expenses on 12/31/17. Stone's tax rate for 2017 (and previous years) was 40%, and the enacted rate for years after 2017 is 35%. In its 2017 income statement, what amount of should Stone report for Income Tax Expense? Select one: a. $98,000 b. $90,000 c. $91,000 d. $108,000 e. $101,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The company reported $58,000 of depreciation expense on its income statement in 2015 and $32,000 in 2016. On its tax returns, Morgan deducted $84,000 for depreciation in 2015 and $94,000 in 2013. The 2016 tax return shows a tax obligation (liability) of $38,400 based on a 40% tax rate. Deferred Income Taxes What is the deferred tax liability for 2016?
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