Question

(I dont know if the selected answers are correct)

Lynch Company had a net deferred tax asset of $68,000 at the beginning of the year, representing a net deductible temporary difference of $200,000 (taxed at 34 percent). During the year, Lynch reported pretax book income of $800,000. Included in the computation were favorable temporary differences of $20,000 and unfavorable temporary differences of $50,000. At the beginning of the year, Congress reduced the corporate tax rate to 21 percent Lynch's deferred income tax expense or benefit for the current year would be: Multiple Choice 3) Net deferred tax benefit of $6,300. Net deferred tax expense of $6,300. Net deferred tax benefit of $32,300. Net deferred tax expense of $32,300.

Answer 1

Answers given by the student is correct. For computation see the image below.

Weavor LYNCH lo, ($) Deferred tax benafit lument Year 6,300 1 $ 20,000 - $50,000 ) *2172] 6,300 Deferred tax benatit - opening balance - $68000 - ($200,000 Ⓡ21 .) 26.000 - $34,000 - 100.000 X214.) 13,000 Net Deferred tax benatit 32,300 19,300