Question 2:

a)A firm paid Rs. 43,000 in dividends over the last period. The beginning balance of retained earnings was nil and ending balances Rs. 1,25,000 respectively. Assuming a 35% average tax rate, what was the firm's net income before and after taxes?

b)The Malik Company has total annual revenue of $750,000; expenses other than depreciation of $300,000; depreciation expense of $200,000 for tax purposes; and depreciation expense of $140,000 for reporting purposes. The tax rate is 30%. Calculate net income for reporting purposes and for tax purposes. What is the deferred tax liability

Note: All the answers must be handwritten and in an organized manner