Ask Question
29 August, 17:19

Giada Foods reported $940 million in income before income taxes for 2011, its first year of operations.

Tax depreciation exceeded depreciation for financial reporting purposes by $100 million. The company

also had non-tax-deductible expenses of $80 million relating to permanent differences. The income tax rate

for 2011 was 35%, but the enacted rate for years after 2011 is 40%. The balance in the deferred tax

liability in the December 31, 2011, balance sheet is

A. $35 million.

B. $16 million.

C. $40 million.

D. $56 million.

0
Answers (1)
  1. 29 August, 17:37
    0
    C. $40 million

    Explanation:

    Deferred Tax only caters temporary differences and hence

    Deferred tax liability in the December 31, 2011, balance sheet is ($100M x 40%) = $40M.

    There is no impact of non-tax-deductible expenses of $80 million relating to permanent differences on deferred tax liability account.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Giada Foods reported $940 million in income before income taxes for 2011, its first year of operations. Tax depreciation exceeded ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers