Question 17 of 20View PoliciesPretax financial income<Estimated litigation expenseExtra depreciation for taxesTaxa incomeCurrent Attempt in ProgressAt the end of 2024, its first year of operations, Sandhill Company prepared a reconciliation between pretax financial income andtaxable income as follows:>O $385600.O $155200.O $556000.O $756000.$27800003780000- / 1(5784000)$776000!!!***The estimated litigation expense of $3780000 will be deductible in 2025 when it is expected to be paid. Use of the depreciable assetswill result in taxable amounts of $1928000 in each of the next 3 years. The income tax rate is 20% for all years.The deferred tax asset at the end of 2024 to be recognized is

Deferred tax asset can be defined as a balance sheet item which shows the tax expenses that are…

At the end of 2024, its first year of operations, Sandhill Company prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income Estimated litigation expense Extra depreciation for taxes Taxable income $2780000 O $385600. O $155200. O $556000. O $756000. 3780000 (5784000) $776000 The estimated litigation expense of $3780000 will be deductible in 2025 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $1928000 in each f the next 3 years. The income tax rate is 20% for all years. The deferred tax asset at the end of 2024 to be recognized is

At the end of 2024, its first year of operations, Sandhill Company prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income Estimated litigation expense Extra depreciation for taxes Taxable income $2780000 O $385600. O $155200. O $556000. O $756000. 3780000 (5784000) $776000 The estimated litigation expense of $3780000 will be deductible in 2025 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $1928000 in each f the next 3 years. The income tax rate is 20% for all years. The deferred tax asset at the end of 2024 to be recognized is

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

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