Question
Yarman Inc. began business on January 1, 2000. Its pretax financial income for the first 2 years was as follows: 2000 $80,000 2001 $150,000 The
Yarman Inc. began business on January 1, 2000. Its pretax financial income for the first 2 years was as follows:
2000 | $80,000 |
2001 | $150,000 |
The following items caused the only differences between pretax financial income and taxable income.
(a) In 2000 the company collected $75,000 of rent; of this amount, $25,000 was earned in 2000; the other $50,000 will be earned equally over the 2001-2002 period. The full $75,000 was included in taxable income in 2000.
(b) The company pays $5,000 a year for life insurance on officers.
(c) In 2001 the company terminated a top executive and agreed to $30,000 of severance pay. The amount will be paid $10,000 per year for 2001-2003. The 2001 payment was made. The $30,000 was expensed in 2001. For tax purposes, the severance pay is deductible as it is paid.
The enacted tax rates existing at December 31, 2000 are:
2000 | 30% | 2002 | 40% |
2001 | 35% | 2003 | 40% |
Determine the net deferred tax asset, if any, as of December 31, 2001? (Enter your response as a whole, absolute number)
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