Mr. G is the CFO of Petro Inc. This year, his salary was $625,000. Petro paid him $500,000 during the year and accrued an unfunded liability to pay him the $125,000 balance in the year he retires at age 60.
a. How much compensation income does Mr. G recognize this year?
b. What is Petro’s book expense for Mr. G’s current compensation?
c. What is Petro’s tax deduction for Mr. G’s current compensation?
d. Assuming a 35 percent tax rate, compute Petro’s deferred tax asset or deferred tax liability (identify which) resulting from the compensation expense.

  • CreatedNovember 03, 2015
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