Question

Grand River Corporation reported pretax book income of $620,000. Included in the computation were favorable temporary differences of $160,000, unfavorable temporary differences of $106,000, and favorable permanent differences of $152,000. The corporation's current income tax expense or benefit would be___________________.

Answer 1

The corporation's current income tax expense or benefit would be $86,940.

Note: The Internal Revenue Service (IRS) 2019 tax rate of 21% for corporation is used since the tax rate is not given in the question.

Step-by-step explanation:

Details Amount ($)

Pretax book income 620,000

Favorable temporary differences (160,000)

Unfavorable temporary differences 106,000

Favorable permanent differences (152,000)

Adjusted income 414,000

Tax expenses (at 21%) (86,940)

Profit after tax 327,060

Therefore, the corporation's current income tax expense or benefit would be $86,940.

Note: The Internal Revenue Service (IRS) 2019 tax rate of 21% for corporation is used since the tax rate is not given in the question.