Amengual Corporation Began Operations in 2011 and Had Operating Losses

question 47

Multiple Choice

Amengual Corporation began operations in 2011 and had operating losses of $400,000 in 2012 and $300,000 in 2013.For the year ended December 31,2014,Amengual had a pretax financial income of $600,000.For 2012 and 2013,assume an enacted tax rate of 30 percent,and for 2014 a 35 percent tax rate.There were no temporary differences in any of the years.In Amengual's 2014 income statement,how much should be reported as income tax expense?

• A) $0
• B) $30,000
• C) $180,000
• D) $210,000

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Definitions:

Rights

Freedoms or entitlements that individuals are guaranteed by law or social agreement.

Voidable

A legal term referring to a transaction or agreement that is valid but may be annulled by one or more of the parties involved.

Anti-assignment Clause

A provision in a contract that prohibits the transfer of rights or delegation of duties to another party without prior approval.

Operation Of Law

Changes in rights or ownership that occur automatically due to established legal rules, without the need for action by the parties involved.