South, Inc

question 39

Multiple Choice

South, Inc., earns book net income before tax of $400,000 in year 1. It acquires a depreciable asset in year 1, and its first-year tax depreciation exceeds book depreciation by $50,000. At the end of year 1, South's deferred tax liability account balance is $10,500. In year 2, South earns $500,000 book net income before tax, and its book depreciation exceeds tax depreciation by $20,000. South records no other temporary or permanent book-tax differences. Assuming that the U.S. tax rate is 21%, what is South's total provision for income tax expense reported on its GAAP financial statements for year 2?

• A) $4,200
• B) $94,500
• C) $105,000
• D) $109,200

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Definitions:

Auction Without Reserve

An auction in which the item for sale will be sold regardless of price, with no minimum bid set.

Bid Revocation

The act of withdrawing a bid before it is accepted, which can typically be done as long as the withdrawal does not violate the terms of the bidding process.

Negotiation

Negotiation is a dialogue between two or more parties aimed at reaching a mutually beneficial outcome or resolving a disagreement.

Valid Contract

A legally binding agreement between parties that meets all requisite legal elements, such as offer, acceptance, consideration, and mutual consent.