In 20x2, TNS, Inc. reports the following:
Consolidated net book income before taxes = $15,000,000, broken down as follows:

1. Net book income before taxes earned in the U.S. of $13,000,000. This income istaxed in the U.S. and nowhere else. Ignore state taxes. All of the book/taxdifferences described below related to this income.

2. Net book income before taxes earned overseas through wholly-ownedsubsidiaries incorporated in foreign countries of $2,000,000. This income is nottaxable in the U.S. but is subject to a foreign tax rate of 10%. There are nobook/tax differences associated with this foreign income.

Other information:
The company has no uncertain tax positions and does not need to record anyvaluation allowances.
The company's ledger at December 31, 20x1 shows the following:
Deferred Asset Account: Debit balance of $753,900
Deferred Liability Account: Credit balance of $1,680,000
Book depreciation is $4,000,000; tax depreciation is $5,000,000
The company must capitalize into ending inventory $60,000 in additional Section263A costs (the $60,000 is already net of prior year reversals)
The company's allowance for bad debts increased by $50,000 during the year
The company's liability for warranties decreased by $20,000 during the year
The company increased its contingent liability (for probable settlements withcustomers who slipped and fell on its property) by $260,000Included in U.S. book income is:
$30,000 of interest income from municipal bonds
$375,000 of life insurance proceeds received on the death of anexecutive

Expenses in U.S. book income include:

$20,000 of business meals NOT FROM RESTAURANTS

$10,000 of business entertainment expenses
$5,000 in bribes paid to the mayor to secure a zoning variance
What is TNS's current income tax expense for 20x2?
What is TNS's deferred income tax expense for 20x2?
What is TNS's effective tax rate for 20x2?
What is TNS's balance it its deferred tax asset account (in its ledger) on12/31/x2
What is TNS's balance in its deferred tax liability account (in its ledger) on12/31/x2?

Answer rating: 100% (QA)

To calculate TNS Incs current income tax expense for 20x2 deferred income tax expense for 20x2 effective tax rate for 20x2 balance in its deferred tax asset account and balance in its deferred tax lia... View the full answer