RG Corporation Has a Temporary Difference of $40,000 in 2014

question 115

Essay

RG Corporation has a temporary difference of $40,000 in 2014.Its tax rate in 2014 is 40% and the government enacted tax rate known at the end of 2014 for 2000 and subsequent years is 45%.What tax rate should be used to calculate the deferred income tax asset or liability?

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Definitions:

Operating Expenses

Recurring expenses incurred through normal business operations, such as rent, utilities, and payroll, excluding COGS.

Cash Payments

Transactions that involve the direct transfer of money to settle obligations, including expenses, debts, or purchases, without the use of credit.

Accounts Receivable

Money owed to a company by customers for products or services that have been delivered or used but not yet paid for.

Income Tax Payable

This represents the amount of income tax that a company owes to the government but has not yet paid.