A firm reported the following in its income statement for the current year: depreciation expense,$4,000; pollution violation fine,$12,000; pre-tax accounting income,$10,000.The tax rate is 40%.For tax purposes,the CCA deduction was $9,000.What amount of CURRENT income tax expense will be recognized for this year?

Question

Quizplus · Accepted Answer

First, we need to calculate the taxable income by adjusting the pre-tax accounting income with the given information:

Taxable Income = Pre-tax accounting income - Depreciation expense - CCA deduction + Pollution violation fine 
= $10,000 - $4,000 - $9,000 + $12,000 
= $9,000

Next, we can calculate the current income tax expense using the tax rate:

Current income tax expense = Taxable Income x Tax rate 
= $9,000 x 0.40 
= $3,600

Therefore, the correct answer is C.

A Firm Reported the Following in Its Income Statement for the Current