Lynch Company Had a Net Deferred Tax Asset of $68,000

question 21

Multiple Choice

Lynch Company had a net deferred tax asset of $68,000 at the beginning of the year,representing a net taxable temporary difference of $200,000.During the year,Lynch reported pretax book income of $800,000.Included in the computation were favorable temporary differences of $20,000 and unfavorable temporary differences of $50,000.During the year,the company's tax rate decreased from 34% to 30%.Lynch's deferred income tax expense or benefit for the current year would be:

• A) Net deferred tax benefit of $9,000.
• B) Net deferred tax expense of $9,000.
• C) Net deferred tax benefit of $1,000.
• D) Net deferred tax expense of $1,000.

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Definitions:

Family Businesses

Companies that are owned, managed, and operated by multiple generations of a family, often with the intention of passing the leadership to the next generation.

Systematic Way

An organized and methodical approach to completing tasks or solving problems.

Entrepreneurial Mindset

A set of attitudes, skills, and behaviors that individuals possess, which drives them to innovate, create, and seek opportunities for growth or problem-solving in business contexts.

Family Enterprise

A business organization in which decision-making and ownership are influenced by multiple generations of a family.