Pretax financial income for 2021 $2,700,000 Tax exempt interest (150,000) Originating temporary difference (450,000) Taxable income $2,100,000 The temporary difference will reverse evenly over the next two years at an enacted tax rate of 30%. The enacted tax rate for 2021 is 20%. What amount should be reported in its 2021 income statement as the current portion of?

Question

Business

Imani

5 July, 21:39

Pretax financial income for 2021 $2,700,000 Tax exempt interest (150,000) Originating temporary difference (450,000) Taxable income $2,100,000 The temporary difference will reverse evenly over the next two years at an enacted tax rate of 30%. The enacted tax rate for 2021 is 20%. What amount should be reported in its 2021 income statement as the current portion of?

+1

Answers (1)

Know the Answer?

Haylee Hines · Answer 1

Income tax for 2021 = $450,000

Explanation;

Given the following:

Pretax income, 2021 = $2,700,000

interest 2021 = $ (150,000) - Interest are exempted from tax payment

temporary differences = $450,000

taxable income = pretax income - (tax exempt interest + temporary differences) =

Taxable income = $2,700,000 - ($150,000 + 450,000)

Taxable income = $2,100,000

current portion of its provision for income taxes = taxable income 2021 x tax rate

$2,100,000 x 20% = $420,000