Question

Use the following information for 1-4 ( this is the only information I have) Please answer as much as you can.

Zurich Inc. reports pretax financial income of $100,000 in 2017. The following items cause

taxable to be different from pretax financial income.

1. Depreciation reported on the tax return is greater than the depreciation on the income

statement by $20,000.

2. Prepaid Rent collected and reported on the tax return is greater than rent revenue recognized

on the income statement by $25,000

3. Life Insurance premium paid for key executives are reported at $10,000 in the income

statement and dis-allowed for tax purposes.

4. Accrued product warranties in the income statement is $12,000 and the actual warranty

expense deductible for tax purposes is $5,000

Zurich’s tax rate is 30% for all years and the company expects to report taxable income in all

future years. There are no deferred taxes at the beginning of 2017.

1. The taxable income for 2017 is

a.$122,000

b.$128,000

c.$132,000

d.$140,000

2. The income tax expense for 2017 is

a.$21,000

b.$36,600

c.$33,000

d.$30,100

3. The deferred tax asset for 2017 is

a. $13,500

b. $9,600

c. $12,600

d. $14,100

4. The deferred tax liability for 2017 is

a. $4,800

b. $7,500

c. $3,600

d. $6,000

Answer 1

The answer has been presented to the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.