If Taxable Income Is $220 000, Accounting Profit Is $200

question 63

True/False

If taxable income is $220 000, accounting profit is $200 000, interest payable is $20 000, interest is recognised for tax when paid and the tax rate is 30%, then we know that tax payable is $66 000, tax expense is $60 000 and a deferred tax asset of $6000 will be recorded in the balance sheet.

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Definitions:

Book Value

Book value is the value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus any depreciation, amortization, or impairment costs.

Common Share

Common share represents equity ownership in a corporation, giving shareholders voting rights and a portion of the profits through dividends.

Par Value

Par value refers to the nominal or face value of a bond, stock, or coupon as stated by the issuer, and may have legal implications for capital stock.

Common Stock

A type of equity security that represents ownership in a corporation and entitles its holders to vote on corporate matters and receive dividends.