Ross Co. began operations in the current year. Use the following facts to answer
ID: 2530865 • Letter: R
Question
Ross Co. began operations in the current year. Use the following facts to answer this question. * Ross reported $225,000 in income before income taxes for the year. * Ross' current-year tax depreciation exceeded its book depreciation by $25,000. * Ross had nondeductible book expenses of $10,000 related to permanent differences. * Ross' tax rate for the current year is 40%. * Ross’ tax rate for subsequent years is 35%. In its current-year balance sheet, what amount of deferred income tax liability should Ross report?
$8,750
$10,000
$12,250
$14,000
$8,750
$10,000
$12,250
$14,000
Explanation / Answer
Answer
A. $8,750
Explanation :
Note :
Deferred income tax liability should Ross report = $25,000 * 35 % = $8,750
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