South,Inc. ,earns book net income before tax of $400,000 in 2009.South acquires a depreciable asset in 2009 and first year tax depreciation exceeds book depreciation by $50,000.At the end of 2009,South's deferred tax liability account balance is $17,500.In 2010,South earns $500,000 book net income before tax and its book depreciation exceeds tax depreciation by $20,000.South has no other temporary or permanent differences.Assuming the U.S.tax rate is 35%,what is South's current income tax expense reported on its financial statements for 2010?

Question

Quizplus · Accepted Answer

The current income tax expense is calculated as the book net income before tax adjusted for temporary differences, multiplied by the tax rate. For 2010, the book net income before tax is $500,000. The book depreciation exceeds tax depreciation by $20,000, so the taxable income is $500,000 + $20,000 = $520,000. The current income tax expense is $520,000 * 35% = $182,000.

South,Inc ,Earns Book Net Income Before Tax of $400,000 in 2009.South