A company earned $860,000 in pre-tax income, while its tax return showed taxable income of $560,000. At a tax rate of 40%, how much is the income tax expense under the taxes payable method permitted under ASPE?

Question

Quizplus · Accepted Answer

The income tax expense under the taxes payable method is calculated based on the taxable income shown on the tax return. With a taxable income of $560,000 and a tax rate of 40%, the income tax expense is $560,000 * 40% = $224,000.

A Company Earned $860,000 in Pre-Tax Income, While Its Tax