Information relating to Gordon Corporation for Year 1 and Year 2 is as follows:

(CMA adapted, Jun 86, #9) Refer to the Gordon Corporation example.Gordon Corporation's current income tax expense for Year 2 was

Question

Information relating to Gordon Corporation for Year 1 and Year 2 is as follows:

(CMA adapted, Jun 86, #9) Refer to the Gordon Corporation example.Gordon Corporation's current income tax expense for Year 2 was

Quizplus · Accepted Answer

To calculate the current income tax expense for Year 2, we need to calculate the taxable income for Year 2 first. 
Taxable Income (Yr 2) = Income Before Tax (Yr 2) - Non-Deductible Expenses (Yr 2) + Taxable Income Carryover (Yr 1)
= $10,000,000 - $2,500,000 + $1,500,000 
= $9,000,000

Then, we can use the tax rate of 0.176 to calculate the income tax expense for Year 2:
Current Income Tax Expense (Yr 2) = Taxable Income (Yr 2) x Tax Rate 
= $9,000,000 x 0.176 
= $1,584,000

Therefore, the closest answer is C) $1,592,000.

Information Relating to Gordon Corporation for Year 1 and Year