A Firm Reported the Following in Its Income Statement for the Current

question 115

Multiple Choice

A firm reported the following in its income statement for the current year: depreciation expense,$4,000; pollution violation fine,$12,000; pre-tax accounting income,$10,000.The tax rate is 40%.For tax purposes,the CCA deduction was $9,000.What amount of deferred income tax (benefit) expense will be recognized for this year? Assume no beginning deferred tax amounts and a constant tax rate of 40%.

• A) A $2,000 deferred tax benefit.
• B) A $2,000 deferred tax expense.
• C) A $6,800 deferred tax benefit.
• D) A $6,800 deferred tax expense.

---

Definitions:

Tensional Force

The pulling force applied to an object that can cause it to stretch.

Diamond Frame

The conventional design for bicycle frames, characterized by two triangles forming a diamond shape.

Twist Frame

A term possibly related to structures or vehicles that refers to a frame designed to accommodate or resist torsional forces or twisting motion.

Snowplow

A vehicle or device equipped with a large blade at the front used to remove snow from surfaces such as roads and driveways.