Question

Alvis Corporation reports pretax accounting income of $260,000, but due to a single temporary difference, taxable income is only $145,000. At the beginning of the year, no temporary differences existed. Required: 1. Assuming a tax rate of 30%, what will be Alvis's net income? 2. What will Alvis report in the balance sheet pertaining to income taxes? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming tax rate of 30%, what will be Alvis's net income? Required 2 >

Answer 1

Answer

• Working

A	Pretax Income	$260,000
B	Taxable Income	$145,000
C = A - B	Temporary difference	$115,000
D = B x 30%	Income tax payable	$43,500
E = C x 30%	Deferred Tax Liability	$34,500
F = D+E	Income tax expense	$78,000
G = A - F	Net Income	$182,000

• Requirement 1
  Net Income = $ 182,000
• Requirement 2

Accounts reported:
Income Tax Payable = $ 43,500
Deferred Tax Liability = $ 34,500