For its first year of operations, Tringali Corporation\'s reconciliation of pret

Question

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income Permanent difference Temporary difference-depreciation Taxable income $300,000 15,000 (50.000) $265,000 Tringali's tax rate is 40%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations? Select one: 0 A. $14,000. 0 B. $8,000. O C. $35,000. D. $20,000.

Explanation / Answer

Deferred tax only created on temporary difference :

in this question temporary difference is $50000

so deferred income tax liablity is (50000*40%) = $20000

so answer is d) $20000

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