Tax-exempt interest will create a deductible temporary difference. True or False

A valuation allowance only reduces a deferred tax asset and not a deferred tax liability. True or False

Under ASC 740, an uncertain tax position must pass the recognition test before it is measured for balance sheet purposes. True or False

Which of the following taxes would not be accounted for under ASC 740? Multiple Choice

Value-added taxes paid to the Dutch government.

Income taxes paid to the state of Michigan.

Income taxes paid to the City of San Francisco.

Income taxes paid to the U.S. government.

Abbot Corporation reported pretax book income of $600,000 in 2018. Included in the computation were favorable temporary differences of $150,000, unfavorable temporary differences of $50,000, and an unfavorable permanent differences of $40,000. Abbots current income tax expense for 2018 would be: Multiple Choice

$126,000

$117,600

$113,400

$105,000