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Haag Corp.'s 2015 income statement showed pretax accounting income of $1,250,000. To compute the federal income...

Haag Corp.'s 2015 income statement showed pretax accounting income of $1,250,000. To compute the federal income tax liability, the following 2017 data were provided:

Income from exempt municipal bonds                                                                                   $50,000
Depreciation deducted for tax purposes in excess of depreciation
        deducted for financial statement purposes                                                                $100,000
Estimated federal income tax payments made                                                                 $250,000
Enacted corporate income tax rate                                                                                                  30%

What amount of current federal income tax liability should have been included in Hagg's December 31, 2017, balance sheet?

$80,000
$110,000
$125,000
$330,000
business   accounting   
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Answer #1

Tax liability = (pretax accounting income - exempt income - excess depreciation) * tax rate

=(1250000-50000-100000)*30%

=330,000

Tax payments already made = 250,000

Tax liability left = 330,000-250,000 = $80,000

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