How would this affect an existing deferred tax liability

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Q1. A member of the board of directors is concerned that the company's income statement reports an income tax expense of $12.3 million, but the income tax obligation to the government for the year is only $7.9 million. How might the corporate controller explain this difference?

Q2. Sometimes a temporary difference will produce future deductible amounts. Explain what is meant by future deductible amounts. Describe two general situations that have this effect. How are such situations recognized in the financial statements?

Q3. Suppose a tax reform bill is enacted that causes the corporate tax rate to charge from 34% to 36%. How would this affect an existing deferred tax liability? How would the change be reflected in income?

Reference no: EM133114361

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