Reference no: EM132873236

Cascade company is determining the amount of pretax accounting income for the current year by making adjustment to taxable income from income tax return.

The tax return showed taxable income of 4,000,000 in which a tax liability 1,200,000 has been recognized.

The following items may be required to determine pretax accounting income from the amount of taxable income:

• Accelerated depreciation for income tax purposes was 500,000. Straight line financial depreciation on the assets is 400,000.
• Goodwill impairment loss of 300,000 was not included as a deduction in the tax return but may be deducted in the income statement
• Interest income in treasury bills was not included in the tax return. During the year, 600,000 was received on these investments

Question 1: What is the pretax accounting income?

a) 4,100,000

b) 4,200,000

c) 4,300,000

d) 4,400,000