Complete the following statements by filling in the blanks. (a) If total tax exp

Question

Complete the following statements by filling in the blanks.
(a) If total tax expense is $47,000 and deferred tax expense is $61,000, then the current portion of the expense computation is referred to as current tax

expensebenefit

of $

. (b) An increase in the Deferred Tax Liability account on the balance sheet is recorded by a

creditdebit

to the Income Tax Expense account. (c) In a period in which a taxable temporary difference reverses, the reversal will cause taxable income to be

greater thanlessthan

pretax financial income. (d) An income statement that reports current tax expense of $79,000 and deferred tax benefit of $24,000 will report total income tax expense of $

. (e) If a corporation’s tax return shows taxable income of $99,000 for Year 2 and a tax rate of 40%, how much will appear on the December 31, Year 2, balance sheet for “Income taxes payable” if the company has made estimated tax payments of $36,200 for Year 2? $

. (f) If a $72,400 balance in Deferred Tax Asset was computed by use of a 40% rate, the underlying cumulative temporary difference amounts to $

. (g) A valuation account is needed whenever it is judged to be

unlikelymore likely than not

that a portion of a deferred tax asset

will not bewill be

realized. (h) Deferred taxes

are notare

recorded to account for permanent differences. (i) If the tax return shows total taxes due for the period of $75,000 but the income statement shows total income tax expense of $55,000, the difference of $20,000 is referred to as deferred tax

expensebenefit

. (j) If a taxable temporary difference originates in 2017, it will cause taxable income for 2017 to be

less thangreater than

pretax financial income for 2017.

Explanation / Answer

a)

Total tax expense = $47,000

Deferred tax expense = $61,000

Current tax = Total tax expense – Deferred tax expense = $47,000 - $61,000 = -$14,000

Hence, correct answer is Current tax benefit of $14,000

b)

Correct answer is Debit

Any increase in liability shall lead to credit to liability account which is supported by the corresponding debit to expense account.

c)

Reversal of taxable temporary difference shall lead taxable income to be less than pretax financial income.

d)

Total tax expense = Current tax expense – Deferred tax benefit = $79,000 - $24,000 = $55,000

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