A Firm Reported the Following in Its Income Statement for the Current

question 110

Multiple Choice

A firm reported the following in its income statement for the current year: depreciation expense, $4,000; pollution violation fine, $12,000; pre-tax accounting income, $10,000.The tax rate is 40%.For tax purposes, the CCA deduction was $9,000.What amount of deferred income tax (benefit) expense will be recognized for this year? Assume no beginning deferred tax amounts and a constant tax rate of 40%.

• A)A $2,000 deferred tax benefit.
• B)A $2,000 deferred tax expense.
• C)A $6,800 deferred tax expense.
• D)A $6,800 deferred tax benefit.

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Definitions:

Mastery

The comprehensive knowledge or skill in a subject or accomplishment.

Subsistence Economies

Refers to economies where communities or groups focus on producing just enough resources to cover their immediate needs.

Conformity Levels

Refers to the degree to which individuals adjust their behaviors, attitudes, or beliefs to match those of a group or social norm.

Power Hierarchies

The organization of individuals within groups that dictates the distribution of power and authority.