South,Inc. ,earns book net income before tax of $400,000 in 2012.South acquires a depreciable asset in 2012,and first year tax depreciation exceeds book depreciation by $50,000.At the end of 2012,South's deferred tax liability account balance is $17,500.In 2013,South earns $500,000 book net income before tax,and its book depreciation exceeds tax depreciation by $20,000.South records no other temporary or permanent book-tax differences.Assuming that the U.S.tax rate is 35%,what is South's current income tax expense reported on its GAAP financial statements for 2013?

Question

Quizplus · Accepted Answer

First, we need to calculate South's taxable income for 2013 using the book-tax difference given:

Book depreciation exceeds tax depreciation by $20,000, so taxable income is:
$500,000 - $20,000 = $480,000

Next, we need to calculate South's income tax expense based on the information given:

Current income tax expense = Current taxable income x Tax rate
Current taxable income = $480,000
Tax rate = 35%

Current income tax expense = $480,000 x 0.35 = $168,000

Therefore, the answer is D) $182,000.

South,Inc ,Earns Book Net Income Before Tax of $400,000 in 2012.South