In its first year of operations, Woodmount Corporation reported pretax accounting income of $580 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $300 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be increased under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be: Multiple Choice $90 million $120 million $100 million $105 million
In its first year of operations, Woodmount Corporation reported pretax accounting income of $580 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $300 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be increased under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be: Multiple Choice $90 million $120 million $100 million $105 million
Chapter14: Taxes On The Financial Statements
Section: Chapter Questions
Problem 4BCRQ
Related questions
Question
In its first year of operations, Woodmount Corporation reported pretax accounting income of $580 million for the current year.
Multiple Choice
$90 million
$120 million
$100 million
$105 million
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