Kent Inc.’s reconciliation between financial statement and taxable income for 20X1 follows: Pre-tax financial income$150,000 Permanent difference (12,000) 138,000 Temporary difference—depreciation (9,000)Taxable income$129,000 Additional Information: At December 31, 20X0 20X1 Cumulative temporary difference(future taxable amounts)$11,000 $20,000 The enacted tax rate is 21%. Required:In its 20X1 income statement, what amount should Kent report as the deferred portion of income tax expense?

Answered: In its 20X1 income statement, what…

The income tax expense is the charge against the net taxable income of the taxpayer. The income…

At December 31,

Cumulative temporary difference
(future taxable amounts)

Business

Accounting

In its 20X1 income statement, what amount should Kent report as the deferred portion of income tax expense?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter16: Multijurisdictional Taxation

Section: Chapter Questions

Problem 1BCRQ

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Kent Inc.’s reconciliation between financial statement and taxable income for 20X1 follows:


Pre-tax financial income	$	150,000
Permanent difference		(12,000	)
		138,000
Temporary difference—depreciation		(9,000	)
Taxable income	$	129,000

Additional Information:

The enacted tax rate is 21%.

Required:

In its 20X1 income statement, what amount should Kent report as the deferred portion of income tax expense?

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