Question

Fleming Company has the following cumulative taxable temporary differences: 12/31/18 12/31/17 $1,600,000 $2,250,000 The tax rate enacted for 2018 is 40%, while the tax rate enacted for future years is 30%. Taxable income for 2018 is $4,000,000 and there are no permanent differences. Fleming's pretax financial income for 2018 is:

Answer 1

Pretax financial income is $3,350,000.00

Step-by-step explanation:

Fleming's pretax financial income is the taxable income for 2018 plus the increase in cumulative taxable temporary difference in 2018.

Taxable income is $4,000,000

Difference in cumulative taxable difference=$1,600,000-$2,250,000

=-$650,000

pretax financial income=$4,000,000+(-$650,000)

=$4,000,000-$650,000

=$ 3,350,000.00

The pretax financial income for year 2018 is $3,350,000.00