Party Ltd has a taxable loss before tax of ($4500) in 2011.

In each year, the tax depreciation exceeds the accounting depreciation by $500. This is expected to reverse within the 10 year tax loss carried forward period.

The tax rate is 30%. At the end of 2011 management was unable to confirm if there would be future taxable profits, so this affected how they deferred tax asset recognised.

Then in 2012, there was a taxable profit of $7000. What is the amount that would be charged against current tax income in 2012?

A. $150

b. $500

c. $1, 200

D. $1350