Robinson Company Had a Net Deferred Tax Liability of $34,000

question 22

Multiple Choice

Robinson Company had a net deferred tax liability of $34,000 at the beginning of the year, representing a net taxable temporary difference of $100,000. During the year, Robinson reported pretax book income of $400,000. Included in the computation were favorable temporary differences of $50,000 and unfavorable temporary differences of$20,000. During the year, the company's tax rate increased from 34% to 35%. Robinson's deferred income tax expense or benefit for the current year would be:

• A) Net deferred tax benefit of $11,500.
• B) Net deferred tax benefit of $10,500.
• C) Net deferred tax expense of $10,500.
• D) Net deferred tax expense of $11,500.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue, indicating the company's actual profitability.

Income Statement

A record detailing a firm's income, costs, and gains during a particular timeframe.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's wear and tear, decay, or decline in value.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired and put into use.