Haag Cop\'s 2011 income statement showed pretax accounting income of $750,000. T

Question

Haag Cop's 2011 income statement showed pretax accounting income of $750,000. To compute federal income tax liability, the following 2011 data are provided:

Income from exempt municipal bonds $30,000.
Depreciation deducted for tax purposes in excess of
depreciation deducted for financial statement purposes 60,000.
Estimated federal income tax payments made 150,000.
Enacted corporate income tax rate 30%
What amount of current federal income tax liability should be included in Hagg's December 31,2011 balance sheet?

a. $48,000.
b. $66,000.
c. $75,000.
d.$198,000.

Explanation / Answer

Pre Tax Accounting Income 750,000.00 Less :Income from Exempt Municipal Bonds (30,000.00) Less: Depreciation deducted for tax purposes in (60,000.00) excess of depreciation deducted for Financial statement purposes Pre Tax Adjusted Accounting Income 660,000.00 Tax Rate 0.30 Tax Amount 198,000.00 Less : Payments already made 150,000.00 Income Tax Liability 48,000.00

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