Questions -
1. North, Inc., earns book net income before tax of $500,000 in 2010. In computing its book income, North deducts $50,000 more in warranty expense for book purposes than allowed for tax purposes. North has no other temporary or permanent differences. Assuming the U.S. tax rate is 35% and no valuation allowance is required, what is North's total income tax expense reported on its financial statements for 2010?
a. $175,000.
b. $192,500.
c. $157,500.
d. $17,500.
e. None of the above.
2. North, Inc., earns book net income before tax of $500,000 in 2010. In computing its book income, North deducts $50,000 more in warranty expense for book purposes than allowed for tax purposes. North has no other temporary or permanent differences. Assuming the U.S. tax rate is 35% and no valuation allowance is required, what is North's current income tax expense reported on its financial statements for 2010?
a. $175,000.
b. $192,500.
c. $157,500.
d. $17,500.
e. None of the above.
3. North, Inc., earns book net income before tax of $500,000 in 2010. In computing its book income, North deducts $50,000 more in warranty expense for book purposes than allowed for tax purposes. North has no other temporary or permanent differences. Assuming the U.S. tax rate is 35% and no valuation allowance is required, what is North's deferred income tax asset reported on its financial statements for 2010?
a. $175,000.
b. $192,500.
c. $157,500.
d. $17,500.
e. None of the above.