Question

Shaw Corporation reported pretax book income of $1,090,000. Included in the computation were favorable temporary differences of $184,000, unfavorable temporary differences of $181,000, and favorable permanent differences of $162,000. Compute the company’s deferred income tax expense or benefit.

Answer 1

$3.000 it's the deferred income tax expense

Step-by-step explanation:

If the favorable temporary differences means that the company had a higher book income than tax income (this last it's the base to paid taxes), it means the company paid less taxes because of the favourable difference, but it generates a future liabilites because with time we must paid the correspondent taxes.

It happens only with temporary differences becauses permanent differences does not reverse over time, this kind of difference between financial accouting and tax accounting it's never eliminated.