Lynch Company Had a Net Deferred Tax Asset of $68,000

question 16

Multiple Choice

Lynch Company had a net deferred tax asset of $68,000 at the beginning of the year, representing a net taxable deductible difference of $200,000 (taxed at 34 percent) . During the year, Lynch reported pretax book income of $800,000. Included in the computation were favorable temporary differences of $20,000 and unfavorable temporary differences of $50,000. At the beginning of the year, Congress reduced the corporate tax rate to 21 percent. Lynch's deferred income tax expense or benefit for the current year would be:

• A)Net deferred tax benefit of $6,300.
• B)Net deferred tax expense of $6,300.
• C)Net deferred tax benefit of $32,300.
• D)Net deferred tax expense of $19,700.

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Definitions:

Food Refrigerator

An appliance used for keeping food and drinks cool, slowing down the growth of bacteria to prolong the freshness and shelf life of perishables.

Temperature

A measure of the warmth or coldness of an object or environment, quantitatively indicating the average kinetic energy of the particles.

Nasal Speculum

A medical tool used to widen the nostrils for examination of the inner nose.

Nose

The part of the human face that contains the nostrils and the organs of smell and forms the beginning of the respiratory tract.