Dover company includes 75000 of tax-exempt interest income from municipal bonds in its reported net income. It also reported a current liability of 270 000 for income tax payable on its balance sheet. The company has a 30% tax rate. What net income will the company report on its income statement?, 975 000, 705 000, 630 000, Viven Automotive Industries reported taxable income of €120 000. There is a DTA created by a difference betwee, tax payable and pretax income of €24 000 which is attributed to warranty expenses. The statutory tax rate is 30% and the company reports income tax payable of €36 000 in the Balance Sheet. What is the amount of income tax expense that Viven should report on its income statement?, 12 000, 28 800, 43 200, Itelligence Inc. reported earnings before taxes of €500 000 on Dec 31, 20X1. The following two items were included in the computation of 20X1 earnings before taxes. - Interest income of €75 000 which was received on tax-exempt municipal bonds - Warranty expense on products sold equaling €25 000 the warranty expense is not deductible for tax purposes in 20X1. However, it is expected that the warranty expense will be deductible for tax purposes in 20X2 and 20X3. If the tax rate in 20X1 is 40%, what is Itelligence Inc.‘s taxable income in 20X1?, €425 000, €450 000, €525 000, LaLaLand company has net temporary differences between taxable income and pretax income of $90 million, resulting in a net deferred tax liability of $30.6 million. An increase in the tax rate would have the following impact on the deferred tax liability and net income:, An increase in the deferred tax liability and a decrease in net income, An increase in the deferred tax liability and no effect on net income, A decrease in both deferred tax liability and net income, A deferred tax asset was originally calculated using a 40% statutory tax rate. A decrease in the statutory tax rate to 30% for future periods will result in an increase of the:, Income tax expense, Deferred tax asset, Net income, 151 900, 171 500, 227 500, Which of the following statements describes the most likely interpretation of deferred tax amounts by an analyst?, The income tax footnotes are not a reliable source of information for explaining why the firm‘s effective income tax rate is different from the statutory tax rate, If a company’s deferred tax liabbilities are expected to decline over time, they should be treated as a part of a company’s equity capital, For some firms, deferred tax liabilities can be viewed as being zero-interest loans from the government that will increase without ever being repaid

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