Robinson Company Had a Net Deferred Tax Liability of $34,340

question 89

Multiple Choice

Robinson Company had a net deferred tax liability of $34,340 at the beginning of the year, representing a net taxable temporary difference of $101,000 (taxed at 34 percent) . During the year, Robinson reported pretax book income of $401,000. Included in the computation were favorable temporary differences of $51,000 and unfavorable temporary differences of $20,500. During the year, Congress reduced the corporate tax rate to 21 percent. Robinson's deferred income tax expense or benefit for the current year would be:

• A) Net deferred tax benefit of $6,405.
• B) Net deferred tax expense of $6,405.
• C) Net deferred tax benefit of $6,725.
• D) Net deferred tax expense of $6,725.

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Definitions:

Specific Performance

A legal remedy where a court requires a party to fulfill their obligations under a contract, rather than providing a financial compensation.

Guarantee Agreement

A legal contract in which one party agrees to be responsible for another's financial obligations or performance under a contract if the latter fails to meet their obligations.

Loan Agreement

A contract between a borrower and lender, specifying the loan's terms, repayment schedule, and interest rate.

Statute of Frauds

A legal concept that requires certain types of contracts to be in writing and signed by all parties involved to be enforceable.