Compute the amount of income tax that boatogooso legally

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Reference no: EM13548806

Boatogooso Company began operating on January 1, 2003. At the end of the first year of operations, Boatogooso reported $500,000 income before income taxes on its income statement but taxable income of $600,000 on its tax return. This difference arose because $100,000 in expenses incurred during 2003 were not yet deductible for income tax purposes according to the income tax regulations. The tax rate is 40%.

1. Compute the amount of income tax that Boatogooso legally owes for taxable income generated during 2003.

2. Compute the amount of income tax expense to be reported on Boatogooso's income statement for 2003.

3. State whether Boatogooso has a deferred income tax asset or a deferred income tax liability as of the end of 2003. What is the amount of the asset or liability?

Reference no: EM13548806

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