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

question 113

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 the current year,and no changes to this rate are foreseen in the near term.For tax purposes,the CCA deduction was $9,000.What amount of deferred income tax (benefit) expense will be recognized for this year? Assume a beginning Deferred Tax asset balance of $4,000.

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