Question

Grand River Corporation reported pretax book income of $620,000. Included in the computation were favorable temporary differences of $160,000, unfavorable temporary differences of $106,000, and favorable permanent differences of $152,000. The corporation's current income tax expense or benefit would be___________________.

Answer 1

Answer:

The corporation's current income tax expense or benefit would be $86,940.

Note: The Internal Revenue Service (IRS) 2019 tax rate of 21% for corporation is used since the tax rate is not given in the question.

Explanation:

Details                                                                Amount ($)

Pretax book income                                             620,000

Favorable temporary differences                       (160,000)    

Unfavorable temporary differences                    106,000

Favorable permanent differences                     (152,000)

Adjusted income                                                  414,000

Tax expenses (at 21%)                                       (86,940)  

Profit after tax                                                     327,060  

Therefore, the corporation's current income tax expense or benefit would be $86,940.

Note: The Internal Revenue Service (IRS) 2019 tax rate of 21% for corporation is used since the tax rate is not given in the question.