Question

AAA prepared the following reconciliation for its first year of operations:  Pretax financial income for...

AAA prepared the following reconciliation for its first year of operations:
 Pretax financial income for 2021 $ 1,800,000
 Tax exempt interest (150,000)
 Originating temporary difference (350,000)
 Taxable income $1,300,000
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 25%. In AAA’s 2021 income statement, what amount should be
reported for total income tax expense?

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Answer #1

Solution:-

What amount should be reported for total income tax expense:-

$430,000

Explanation:-

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