QUESTION

At the end of Year One, a company has an enacted tax rate of 30 percent. During Year One, the company reported a $110,000 gain for financial reporting purposes that would not be taxed until Year Two. Then, during Year Two, the company earned another gain, this one for $180,000, that would not be taxed until Year Three. Near the end of Year Two, Congress changed the enacted tax rate from 30 percent to 36 percent. On its Year Two income statement, what amount should be reported as the company's income tax expense-deferred ?

A $33.000

B $64,800

C $31,800

QUESTION

The Lancaster Corporation reports net income for Year One of $600,000. Within that income, a $50,000 expense cannot be taken legally as a tax deduction. Of the company's revenues, $60,000 will not be taxed until Year Two while a final $70,000 will be taxed in Year Three. The enacted tax rate for Years One and Two is 27 percent. After that, the enacted tax rate is 30 percent. On the company's Year One income statement, what is the total amount reported as income tax expense for the year ?

A $155,500

B $177,600

C $175,500