Goff Corporation has only one temporary difference, which is related to the use of accelerated depreciation for
Question:
Goff Corporation has only one temporary difference, which is related to the use of accelerated depreciation for income tax purposes and straight-line depreciation for financial reporting. Goff had the following amounts of cumulative temporary difference at December 31, 2016, 2017, and 2018:
($ in millions)
December 31, 2016 ................. $380
December 31, 2017 ................. $425
December 31, 2018 ................. $440
Goff has no foreign operations and operates in a state with no income tax. In 2017, the Tax Cuts and Jobs Act was enacted, reducing the corporate income tax rate from 35% to 21%, effective January 1, 2018.
Goff had pre-tax income of $750 million in 2017 and $800 million in 2018. In 2017, Goff’s pre-tax income included compensation expense of $5 million that was not tax deductible. In 2018, $30 million of Goff’s compensation expense was not tax deductible. Goff had no permanent differences other than the excess compensation expense.
Required:
1. What were the amounts of Goff’s current income tax provision (benefit) and deferred income tax provision (benefit) in 2017?
2. What were the amounts of Goff’s current income tax provision (benefit) and deferred income tax provision (benefit) in 2018?
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer