Cold,Inc,Reported a $100,000 Total Tax Expense for Financial Statement Purposes

question 37

Multiple Choice

Cold,Inc.,reported a $100,000 total tax expense for financial statement purposes in 2013.This total expense consisted of $150,000 in current tax expense and a deferred tax benefit of $50,000.The deferred tax benefit consisted of $90,000 in deferred tax assets reduced by a valuation allowance of $40,000.In 2014,Cold reports $600,000 in book net income before tax.Cold records no other permanent or temporary book-tax differences.At the end of 2014,Cold's auditors determine that the existing valuation allowance of $40,000 should be reduced to zero.What is Cold's total tax expense for 2014?

• A)$250,000.
• B)$210,000.
• C)$170,000.
• D)$40,000.

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Definitions:

Heuristic Usage

The use of practical methods or strategies in problem-solving, decision making, and discovery that are not guaranteed to be optimal, perfect, or rational, but are sufficient for reaching immediate goals.

Creative Thinking

The ability to think in new and innovative ways to solve problems or generate original ideas.

Theory of Multiple Intelligences

A psychological theory proposed by Howard Gardner, suggesting that humans have various types of intelligences or cognitive abilities, beyond just IQ.

Triarchic Theory

A theory of intelligence proposed by Robert Sternberg, comprising analytical, creative, and practical components.