Answer:
Smith’s deferred income tax expense or Benefit would be $10,846
Explanation:
In this question, we are asked to calculate Smith’s deferred income tax expense or benefit. We proceed as follows:
Firstly, we calculate the net favorable temporary difference.
Mathematically, the net favorable temporary difference = Favorable temporary difference - Unfavorable temporary difference.
From the question, we can identify that:
Favorable temporary difference = $53,800
Unfavorable temporary difference = $21,900
Hence, the net favorable temporary difference = $53,800 - $21,900 = $31,900
Now, using a tax rate of 34%, Smith’s deferred income tax expense or Benefit would be 34% of $31,900
= 34/100 * 31,900 = $10,846
