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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