Wright Co, Organized on January 2, 2014, Had Pretax Accounting Income

question 93

Multiple Choice

Wright Co., organized on January 2, 2014, had pretax accounting income of $640,000 and taxable income of $2,080,000 for the year ended December 31, 2014 The only temporary difference is accrued product warranty costs which are expected to be paid as follows: $$\begin{array} { r r } 2015 & \$ 480,000 \\2016 & 240,000 \\2017 & 240,000 \\2018 & 480,000\end{array}$$ The enacted income tax rates are 35% for 2014, 30% for 2015 through 2017, and 25% for 2018. If Wright expects taxable income in future years, the deferred tax asset in Wright's December 31, 2014 balance sheet should be

• A) $288,000.
• B) $336,000.
• C) $408,000.
• D) $504,000.

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Definitions:

Equity Theory

A theory of motivation that explains how individuals perceive fairness in distribution of resources within interpersonal relationships, affecting their satisfaction and productivity.

High Self-Esteem

The positive perception and valuation of oneself, reflecting confidence in one’s own worth and abilities.

External Locus of Control

A belief system where individuals perceive their successes or failures resulting from external factors or forces beyond their control.

Distributive Fairness

Refers to the perceived fairness of outcomes and resource distributions within an organization or social group.