Question

At December 31, 2017, Percheron Inc. had a deferred tax asset of \(30,000. At December 31, 2018, the deferred tax asset is \)59,000. The corporation’s 2018 current tax expense is $61,000. What amount should Percheron report as total 2018 income tax expense?

Short answer

Income tax expenseis an organization'sexpenditureon itstotal revenue.Theeffective tax rateon theincome slab is multipliedto obtain thetax amount.

Step-by-step solution

Given the amounts as

Particulars	Amount
Deferred tax asset for 2017	$30,000
Deferred tax asset for 2018	$59,000
Current tax expense	$61,000

Computation of income tax expense for 2018

Particulars	Amount
Deferred tax asset for 2018	$59,000
Less: Deferred tax asset for 2017	$30,000
Deferred tax benefit for 2018	($29,000)
Add: Current tax expense	$61,000
Income tax expense for 2018	$32,000