Swordfish Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for warranties
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Swordfish Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for warranties increased by $25,000. In addition, book depreciation exceeded tax depreciation by $100,000. In prior years, tax depreciation exceeded book depreciation by a cumulative amount of $500,000. Finally, Swordfish subtracted a dividends received deduction of $15,000 in computing its current year taxable income. Using a tax rate of 34%, Swordfish's deferred income tax expense or benefit would be:
A. $25,500 net deferred tax expense.
B. $25,500 net deferred tax benefit.
C. $42,500 net deferred tax benefit.
D. $42,500 net deferred tax expense.
Related Book For
Concepts in Federal Taxation
ISBN: 9780324379556
19th Edition
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher
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