Hi all, can someone explain to me what the difference is between the two questions below?
Venus Corp.'s worksheet for calculating deferred income taxes for 20X1 follows:
20X1 20X2 20X3
Pretax income $1,400 0 0
Temporary differences:
Depreciation (800) (1,200) $2,000
Warranty costs 400 (100) (300)
Taxable income $1,000 (1,300) 1,700
Loss carryback (1,000) 1,000
Loss carryforward 300 (300)
$ 0 $ 0 $1,400
======= ======= =======
Enacted rate 30% 30% 25%
Deferred tax liability
(asset):
Noncurrent $ 50
=======
Venus had no prior deferred tax balances. In its 20X1 income statement, what amount should Venus report as current income tax expense?
A: $420
B: 350
C: 300
D: 0
A company reported the following financial information:
Taxable income for current year $120,000
Deferred income tax liability, beginning of year 50,000
Deferred income tax liability, end of year 55,000
Deferred income tax asset, beginning of year 10,000
Deferred income tax asset, end of year 16,000
Current and future years’ tax rate 35%
The current year’s income tax expense is what amount?
A: 41,000
B: 42,000
C: 43,000
D: 53,000
They seem to be asking for the same thing – current income tax expense. Why is one simply the taxable income x tax rate, but the other takes into account the deferred assets and liabilities? I am using Surgent and most of the questions seem to say that current income tax is taxable income x rate, so I am a little confused.
Thank you!
.