Deferred Income Tax Expense

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  • October 25, 2015 at 7:53 pm #197758
    Anonymous
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    I need help on how this problem. I’m not sure how answer d is correct and how to use which rate. Please help.

    Venus Corp’s worksheet for calculating current and deffered income taxes for year 1 follows.

    Year 1 Year 2 Year 3

    Pre tax income 1,400

    Temp Differences:

    Depr (800) (1200) 2k

    Warranty costs 400 (100) (300)

    Taxable Income 1k (1300) 1700

    Loss c/b (1k) 1k 0

    Loss carryfoward 0 300 (300)

    $0 $0 $1400

    Enacted tax rate 30% 30% 25%

    Venus had no prior deferred tax balances. In its Year 1 income statement what amount should venus report as Deferred Income tax expense?

    a. 300

    b. 350

    c. 120

    d. 95

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