Use the Following Information for Questions

question 29

Multiple Choice

Use the following information for questions.
Hopkins Co.at the end of 2010, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

The estimated litigation expense of $1,000,000 will be deductible in 2011 when it is expected to be paid.Use of the depreciable assets will result in taxable amounts of $500,000 in each of the next three years.The income tax rate is 30% for all years.
-Link Sink Manufacturing has a deferred tax asset account with a balance of $300,000 at the end of 2012 due to a single cumulative temporary difference of $750,000.At the end of 2013, this same temporary difference has increased to a cumulative amount of $1,000,000.Taxable income for 2013 is $1,700,000.The tax rate is 40% for 2013, but enacted tax rates for all future years are 35%.Assuming it's probable that 70% of the deferred tax asset will be realized, what amount will be reported on Link Sink's statement of financial position for the deferred tax asset at December 31, 2013?

• A)$262,500.
• B)$280,000.
• C)$245,000.
• D)$595,000.

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Fairness and justice in the way people are treated, achieved by recognizing and addressing differing needs and circumstances.

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The state of being equal, especially in status, rights, and opportunities; involves the promotion of uniform treatment and absence of discrimination.

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