1 Bramwell Inc. began business on January 1, 2010. Its pretax financial income for the first 2 years was as follows: 2010 $240,000 2011 560,000 The following items caused the only differences between pretax financial income and taxable income. 1. In 2010, the company collected $180,000 of rent; of this amount, $60,000 was earned in 2010; the other $120,000 will be earned equally over the 20112012 period. The full $180,000 was included in taxable income in 2010. 2. The company pays a $10,000 fine for pollution. 3. In 2011, the company terminated a top executive and agreed to $90,000 of severance pay. The amount will be paid $30,000 per year for 20112013. The 2011 payment was made. The $90,000 was expensed in 2011. For tax purposes, the severance pay is deductible as it is paid. The enacted tax rates existing at December 31, 2010 are: 2010 30% 2012 40% 2011 35% 2013 40%