Exercise 19-10 The following facts relate to Sheridan Corporation. 1. Deferred t

Question

Exercise 19-10 The following facts relate to Sheridan Corporation. 1. Deferred tax liability, January 1, 2017, $61,200. 2. Deferred tax asset, January 1, 2017, $20,400. 3. Taxable income for 2017, $107,100. 4. Cumulative temporary difference at December 31, 2017, giving rise to future taxable amounts, $234,600. 5. Cumulative temporary difference at December 31, 2017, giving rise to future deductible amounts, $96,900 6. Tax rate for all years, 40%. No permanent differences exist. 7. The company is expected to operate profitably in the future. Compute the amount of pretax financial income for 2017. Pretax financial income SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Explanation / Answer

Taxable income 107100 Add: Future taxable amounts arsisng during the year 81600 =234600-(61200/40%) Less: Future deductible amounts arsisng during the year 45900 =96900-(20400/40%) Pretax financial income 142800 Income Tax Expense 57120 Deferred Tax Asset 18360 =45900*40%         Income Tax Payable 42840 =107100*40%         Deferred Tax Liability 32640 =81600*40%

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