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Question
During 2011, its first year of operations, a company recorded depreciation expense of $50,000 for book purposes. For tax purposes during 2011, $100,000 of depreciation expense was deducted. The temporary difference created during 2011 will reverse equally during 2012 and 2013. Book income from operations during the first year was $570,000. The income tax rate is 40%. The income tax expense to be reported in the income statement for the first year of operations is
A. $228,000.
B. $208,000.
C. $248,000.
D. $188,000.
Answer
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