Woodward Corporation reported pretax book income of $1,132,500. Included in the computation were favorable temporary differences of $302,500, unfavorable temporary differences of $108,750, and favorable permanent differences of $180,000. Compute the company’s current income tax expense or benefit. Pretax book income Favorable temporary differences Unfavorable temporary differences Favorable permanent differences Taxable incomeTax rate%

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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.