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For calendar year 2020, Kane Corp. reported depreciation of $1,600,000 in its income statement. On...

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Accounting

For calendar year 2020, Kane Corp. reported depreciation of $1,600,000 in its income statement. On its 2020 income tax return, Kane reported depreciation of $2,400,000. Kane's income statement also included $300,000 accrued warranty expense that will be deducted for tax purposes when paid. Kane's taxable income was $5,200,000, and the enacted tax rates are 21% for 2020 and 24% for 2021 and thereafter. The depreciation difference and warranty expense will reverse over the next three years as follows:

Depreciation Difference Warranty Expense

2021 $320,000 $ 60,000

2022 280,000 100,000

2023 200,000 140,000

$800,000 $300,000

Kane previously had no deferred taxes, and these were Kane's only temporary differences. In Kane's 2020 income statement, income tax expense should be

a. 1,212,000

b. 1,665,000

c.1,750,000

d. 987,000

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