(Two Temporary Differences, One Rate, Beginning Deferred Taxes, Compute Pretax Financial Income) The following facts relate to Mc Kane Corporation.
1. Deferred tax liability, January 1, 2010, $60,000.
2. Deferred tax asset, January 1, 2010, $20,000.
3. Taxable income for 2010, $115,000.
4. Cumulative temporary difference at December 31, 2010, giving rise to future taxable amounts, $210,000.
5. Cumulative temporary difference at December 31, 2010, giving rise to future deductible amounts, $95,000.
6. Tax rate for all years, 40%. No permanent differences exist.
7. The company is expected to operate profitably in the future.