Two independent situations are described below. Each situation has future deductible amounts and/or future taxable...
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Accounting
Two independent situations are described below. Each situation has future deductible amounts and/or future taxable amounts produced by temporary differences:
| Situation | 1 | 2 | |
| Taxable income | $40,000 | $80,000 | |
| Amounts at year-end: | |||
| Future deductible amounts | 5,000 | 10,000 | |
| Future taxable amounts | 0 | 5,000 | |
| Balances at beginning of year: | |||
| Deferred tax asset | $1,000 | $4,000 | |
| Deferred tax liability | 0 | 1,000 |
The enacted tax rate is 40% for both situations.
Determine the income tax expense for the year.
a.
| Situation 1 | Situation 2 |
| $20,000 | $28,000 |
b.
| Situation 1 | Situation 2 |
| $11,000 | $30,000 |
c.
| Situation 1 | Situation 2 |
| $15,000 | $33,000 |
d.
| Situation 1 | Situation 2 |
| $16,000 | $32,000 |
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