Li Corporation reported pretax book income of $705,000. Tax depreciation exceeded book depreciation by $421,000. Li's beginning book (tax) basis in its fixed assets was $2,005,000 ($1,784,000) and its ending book (tax) basis is $1,905,000 ($1,326,000). In addition, the company received $405,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $74,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit.
Li Corporation reported pretax book income of $705,000. Tax depreciation exceeded book depreciation by $421,000. Li's beginning book (tax) basis in its fixed assets was $2,005,000 ($1,784,000) and its ending book (tax) basis is $1,905,000 ($1,326,000). In addition, the company received $405,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $74,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Li Corporation reported pretax book income of $705,000. Tax depreciation exceeded book depreciation by $421,000. Li's beginning
book (tax) basis in its fixed assets was $2,005,000 ($1,784,000) and its ending book (tax) basis is $1,905,000 ($1,326,000). In addition,
the company received $405,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income
of $74,000. 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.
Deferred income tax expense
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