Reference no: EM132600969

Question - Canterbury Company made an accounting profit of 4,000,000 for the year ended December 31, 2017. Included in the accounting profit were the following items of income and expense:

Donation to political parties (nondeductible) 1,000,000

Depreciation - 20% 1,600,000

Annual leave expense 700,000

Rent revenue 1,200,000

Income tax rate 30%

For tax purposes, the depreciation rate is 25%, the annual leave paid is 800,000 and the rent received is 1,000,000. The entity follows the cash basis for tax purposes. What is the liability on December 31, 2017?

a. 1,150,000 c. 1,200,000

b. 1,290,000 d. 1,368,500