Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. robinson company had a net deferred tax liability

Robinson Company had a net deferred tax liability of $34,000 at the beginning of the year,...

Free

90.2K

Verified Solution

Question

Accounting

Robinson Company had a net deferred tax liability of $34,000 atthe beginning of the year, representing a net taxable temporarydifference of $100,000 (taxed at 34%). During the year, Robinsonreported pretax book income of $400,000. Included in thecomputation were favorable temporary differences of $50,000 andunfavorable temporary differences of $20,000. During the year,Congress reduced the corporate tax rate to 21%. Robinson's deferredincome tax expense or benefit for the current year would be:

Net deferred tax benefit of $6,300.

Net deferred tax expense of $6,300.

Net deferred tax benefit of $6,700.

Net deferred tax expense of $6,700.

Angel Corporation reported pretax book income of $1,000,000.During the current year, the net reserve for warranties increasedby $25,000. In addition, tax depreciation exceeded bookdepreciation by $100,000. Finally, Angel subtracted a dividendsreceived deduction of $25,000 in computing its current year taxableincome. Angel's hypothetical tax expense in its reconciliation ofits income tax expense is:

=

$189,000.

$194,250.

$210,000.

$204,750.

Answer & Explanation Solved by verified expert
4.3 Ratings (871 Votes)

Particulars Taxable amount Tax rate Tax expense/ (benefit)
Opening deferred tax liability reversal        100,000 34%    (34,000)
Deferred tax liability at new rate on opening DTL        100,000 21%      21,000
Favorable difference           50,000 21%      10,500
Unfavorable difference           20,000 21%      (4,200)
Net tax benefit      (6,700)

Answer is net tax benefit of $6,700

Question 2:

Particulars Amount
Book income     1,000,000
Add: warranty           25,000
Less: excess depreciation       (100,000)
Less: dividends deduction         (25,000)
Taxable income        900,000
X tax rate 21%
Tax expense        189,000

Answer is $189,000
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

3 POINTS 23 WRITE EACH STATEMENT A A 40 OF 60 IS WHAT NUM

Basic Math
Q

1. A consumer buys a television made by XYZ company from Town Electronics. The consumer hosts a...

Operations Management
Q

Discuss the behavioral differences in boys and girls with ADHD that have been found in clinical...

Psychology
Q

TOPIC 2: Use Figure 2.6 Maslow's Hierarchy of Needs and the accompanying text in Chapter 2...

General Management
Q

Present Herglotz's theorem and its proof.

Basic Math
Q

D. What strategies can the film industry take to lure back the teens?

General Management
Q

The temperature T versus time t graphs of two bodies X and Y with equal...

Physics
Q

Let B 2 5 Compute the power set of B P B Hint Enter the...

Basic Math
Q

Which of the following numbers best describes inequality above?A) [0,4/3)B)[4/3, ?)C) (-?, ?)D) (-?, -4]u[3,...

Basic Math
Q

Leigh Inc. issued $350,000, 8% bonds on August 1, 2021. Interest is payable semi-annually on...

Accounting
Q

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item...

Accounting
Q

QUESTION 3 A friend of yours owns a kitchen manufacturing business in Limerick City called...

Accounting