Deferred Income Taxes
Response to the following problem:
Yosef Company began operating on January 1, 2009. At the end of the first year of operations, Yosef reported $750,000 income before income taxes on its income statement but only $660,000 taxable income on its tax return. This difference arose because $90,000 in income earned during 2009 was not yet taxable according to the income tax regulations. The tax rate is 35%.
1. Compute the amount of income tax that Yosef legally owes for taxable income generated during 2009.
2. Compute the amount of income tax expense to be reported on Yosef's income statement for 2009.
3. State whether Yosef has a deferred income tax asset or a deferred income tax liability as of the end of 2009. What is the amount of the asset or liability?