Answer:
1 2 3 4
a) Income tax payable $34,000 $86,000 $78,000 $104,000
b) Deferred tax Asset $10000 $17000 $12000
c) Deferred tax asset Change $6000 $8000 $8000
d) Deferred tax liability $8000 $8000 $12000
e) Deferred tax liability change $6000 $6000 $12000
f) Income tax expense $28000 $92000 $76000 $108000
Explanation:
Income tax payable = Taxable income * tax rate
Deferred tax asset = future deductible amounts *0.4 + opening balance
future deductible amount could be prepaid expense which is an asset
Deferred tax change = closing balance - opening balance
deferred tax liability = future taxable income * 0.4
Income tax expense = current tax payable + deffered tax ( liability)
OR
= current tax payable - deferred tax asset
to compute the deferred tax to be added to or subtracted from the current tax payable, we need the deferred tax change and if it is a asset we subtract it from current tax payable and if it is a liability we add it
