Harrison Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In...

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Harrison Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In add

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Answer 1

Answer #1

Answer) Deferred income tax expense - $73500

Explanation:

Pretax book income - Excess tax depreciation - tax exempt bond interest = NOL

600000 - 400000 - 300000 = (100000)

NOL is first carried back to prior year to the extent of prior years taxable income, the remaining NOL of $50000 is carried forward.

Excess Tax Depreciation + NOL carryover to future years = Net increase in favorable temporary difference

(400000) + 50000 = (350000)

(350000) x 21% = (73500)

*Assuming a tax rate of 21%.

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Answer 2

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