Li Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. Li's beginning book (tax) basis in its fixed assets was $1,900,000 ($1,700,000) and its ending book (tax) basis is $1,800,000 ($1,200,000). In addition, the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $50,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. Answer is complete but not entirely correct. $ 800,000 X Deferred income tax expense
Li Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. Li's beginning book (tax) basis in its fixed assets was $1,900,000 ($1,700,000) and its ending book (tax) basis is $1,800,000 ($1,200,000). In addition, the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $50,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. Answer is complete but not entirely correct. $ 800,000 X Deferred income tax expense
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ashvin
Transcribed Image Text:Li Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. Li's beginning
book (tax) basis in its fixed assets was $1,900,000 ($1,700,000) and its ending book (tax) basis is $1,800,000 ($1,200,000). In addition,
the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income
of $50,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit.
Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit.
Answer is complete but not entirely correct.
Deferred income tax expense
I$ 800,000 X
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