Question

ACCORDING TO 2019 TAX PURPOSES:

Harrison Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received$300,000 of tax-exempt municipal bond interest. The company’s prior-year tax Return showed taxable income of $50,000. Compute the company’s deferred income tax expense or benefit.

Answer 1

Answer :-

• Let us assume the tax rate 34% .

Particulars	Amount
Pre-tax book income	$600,000
Excess tax depreciation	(  $400,000 )
Tax-exempt interest income	(  $300,000 )
Net operating loss	= $600,000 - $400,000 - $300,000 = ( $100,000 )
NOL carry back to prior year	$50,000
Current income tax refundable	= $50,000 * 34% = $17,000
NOL carryover to 2019	$50,000
Net increase in favorable temporary diff	= $50,000 - $400,000 = ( $350,000 )
Net increase in deferred income tax liability	= ( $350,000 ) * 34% = ( $119,000 )

The net increment in the conceded salary charge obligation is recorded as the organization's conceded assessment cost in the present year. This accept the organization does not record a valuation against the conceded expense resource made by the NOL vestige. Changeless contrasts don't influence the conceded expense arrangement.