Question Mode

Multiple Choice Question

Harley Bean Corporation claimed a tax deduction of $$5,000$ which was uncertain when it was deducted in the current year. However, they are relatively certain of receiving the deduction over a five$-$year period. Their book income for the current year is $$100,000$ and they have a tax rate of $25\%.$ Which of the following is true?

Multiple choice question.

The current portion of Harley's income tax expense is $$5,000.$

Harley has a deferred tax asset of $$1,000.$

Under GAAP, Harley subtracts the entire $$5,000$ in the current year.

Harley's taxable income is equal to $$5,000$