(Two Temporary Differences, One Rate, Beginning Deferred Taxes, Compute Pretax Financial Income) The following facts relate to Mc Kane Corporation.

1. Deferred tax liability, January 1, 2010, $60,000.

2. Deferred tax asset, January 1, 2010, $20,000.

3. Taxable income for 2010, $115,000.

4. Cumulative temporary difference at December 31, 2010, giving rise to future taxable amounts, $210,000.

5. Cumulative temporary difference at December 31, 2010, giving rise to future deductible amounts, $95,000.

6. Tax rate for all years, 40%. No permanent differences exist.

7. The company is expected to operate profitably in the future.