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Li Corporation reported pretax book income of $ 7 0 0 , 0 0 0 . Tax depreciation exceeded book depreciation by $ 4 2

Li Corporation reported pretax book income of $700,000. Tax depreciation exceeded book depreciation by $420,000. Li's beginning book (tax) basis in its fixed assets was $2,000,000($1,780,000) and its ending book (tax) basis is $1,900,000($1,320,000). In addition, the company received $400,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $139,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense.

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