In Its First Year of Operations, Woodmount Corporation Reported Pretax

question 51

Multiple Choice

In its first year of operations, Woodmount Corporation reported pretax accounting income of $500 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $60 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 40% will be reduced under the current law to 35% next year and 30% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be:

• A) $21 million.
• B) $24 million.
• C) $18 million.
• D) $19 million.

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Definitions:

Chromosome

A thread-like structure of nucleic acids and protein found in the nucleus of most living cells, carrying genetic information in the form of genes.

Locus

(pl., loci) The place on the chromosome at which the gene for a given trait occurs (i.e., a segment of the chromosomal DNA containing information that controls some feature of the organism); also called gene locus.

Homozygous

Having a pair of identical alleles for a particular locus. Compare with heterozygous.

Heterozygous

Describes an individual having two different alleles for a specific gene.