In its first three years of operations Sharp Chairs reported the following operating income (loss) amounts: There were no deferred income taxes in any year. In 2017, Sharp elected to carry back its operating loss. The enacted income tax rate was 35% in 2016 and 40% thereafter. In its 2018 balance sheet, what amount should Sharp report as current income tax payable?

Question

In its first three years of operations Sharp Chairs reported the following operating income (loss) amounts:  There were no deferred income taxes in any year. In 2017, Sharp elected to carry back its operating loss. The enacted income tax rate was 35% in 2016 and 40% thereafter. In its 2018 balance sheet, what amount should Sharp report as current income tax payable?

Quizplus · Accepted Answer

[$5,400,000 - ($3,150,000 - 1,350,000)] × 40% = $1,440,000.

In Its First Three Years of Operations Sharp Chairs Reported