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

question 66

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 CURRENT income tax expense will be recognized for this year?

• A) $7,800
• B) $4,000
• C) $6,800
• D) $400
• E) $8,800

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Definitions:

Allocative Efficiency

A state of the economy in which production represents consumer preferences; in other words, every good or service is produced up to the point where the last unit provides a utility equal to its cost of production.

Technological Advance

The progress or development in technology, leading to new products, processes, or systems.

Preferred Mix

The optimal combination or assortment of goods, services, investments, or resources desired by an individual, firm, or economy.

Inverted-U Theory

A concept suggesting that there is an optimum level of a variable, beyond which its effect begins to decline or become negative, often applied to the relationship between income inequality and economic development.