For its first taxable year, Rony Incorporateds accounting records showed the following:

Operating loss per books	$ (800,000)
Temporary book/tax difference	90,000
Net operating loss for tax	$ (710,000)

For its second taxable year, Rony Incorporateds accounting records showed the following:

Net income before tax	$ 1,200,000
Reversal of year 1 book/tax difference	(90,000)
Taxable income before NOL deduction	$ 1,110,000
NOL deduction	(710,000)
Taxable income	$ 400,000

Required:

1. Use a 21 percent rate to compute Ronys tax expense for financial statement purposes for the second tax year.
2. Use a 21 percent rate to compute Ronys tax payable for the second tax year.
3. Compute Ronys reduction in its deferred tax assets for the second tax year.