Reference no: EM131786840
Questions -
Q1. Mitchell Corporation prepared the following reconciliation for its first year of operations:
Pretax financial income for 2011 $900,000
Tax exempt interest (75,000)
Originating temporary difference (225,000)
Taxable income $600,000
The temporary difference will reverse evenly over the next two years at an enacted tax rate of 40%. The enacted tax rate for 2011 is 35%.
What amount should be reported in its 2011 income statement as the deferred portion of income tax expense?
$90,000 credit
$105,000 credit
$90,000 debit
$120,000 debit
Q2. Mitchell Corporation prepared the following reconciliation for its first year of operations:
Pretax financial income for 2011 $900,000
Tax exempt interest (75,000)
Originating temporary difference (225,000)
Taxable income $600,000
The temporary difference will reverse evenly over the next two years at an enacted tax rate of 40%. The enacted tax rate for 2011 is 35%.
In Mitchell's 2011 income statement, what amount should be reported for total income tax expense?
$300,000
$330,000
$315,000
$210,000
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