In Its First Three Years of Operations Sharp Chairs Reported

question 34

Multiple Choice

In its first three years of operations Sharp Chairs reported the following operating income (loss) amounts: There were no deferred income taxes in any year. In 2017, Sharp elected to carry back its operating loss. The enacted income tax rate was 35% in 2016 and 40% thereafter. In its 2018 balance sheet, what amount should Sharp report as current income tax payable?

• A) $900,000.
• B) $1,260,000.
• C) $1,440,000.
• D) $2,160,000.

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Definitions:

Price Elastic

Relating to the responsiveness of the demand or supply of a good or service to changes in its price.

Price Elasticity

A measure of the responsiveness of the quantity demanded or supplied of a good or service to a change in its price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level.

Inelastic

A description of a situation where the demand or supply for a good or service is relatively unresponsive to changes in price.