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Li Corporation reported pretax book income of $615,000. Tax depreciation exceeded book depreciation by $403,000. Li's beginning book (tax) basis in its fixed assets was $1,915,000 ($1,712,000) and its ending book (tax) basis is $1,815,000 ($1,218,000). In addition, the company received $315,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $127,000. 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.

Li Corporation reported pretax book income of $615,000. Tax depreciation exceeded book depreciation by $403,000. Li's beginning book (tax) basis in its fixed assets was $1,915,000 ($1,712,000) and its ending book (tax) basis is $1,815,000 ($1,218,000). In addition, the company received $315,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $127,000. 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Li Corporation reported pretax book income of $615,000. Tax depreciation exceeded book depreciation by $403,000. Li's beginning book (tax) basis in its fixed assets was $1,915,000 ($1,712,000) and its ending book (tax) basis is $1,815,000 ($1,218,000). In addition, the company received $315,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $127,000. 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.
Transcribed Image Text:Li Corporation reported pretax book income of $615,000. Tax depreciation exceeded book depreciation by $403,000. Li's beginning book (tax) basis in its fixed assets was $1,915,000 ($1,712,000) and its ending book (tax) basis is $1,815,000 ($1,218,000). In addition, the company received $315,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $127,000. 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.
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