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You, are the senior auditor assigned to the True Ltd. audit file. You are reviewing Truestars financial statements and note that the only items included

You, are the senior auditor assigned to the True Ltd. audit file. You are reviewing Truestars financial statements and note that the only items included on Trues balance sheet that have temporary differences for future income taxes are: intangible assets relating to deferred development costs of $20,000, a leased asset of $80,000, and a lease obligation of $69,000. Trues tax rate is 20% and the company uses the future income tax method to account for income taxes. At the end of last year, Trues future income tax liability was $7,000. Calculate Trues future tax expense/recovery for the current year?

a.

$4800 recovery

b.

$6200 expense

c.

$3000 recovery

d.

$800 recovery

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