Heron Corporation reported pretax book income of $4,000,000. Included in the computation were favorable temporary differences of $500,000, unfavorable temporary differences of $700,000, and unfavorable permanent differences of $200,000. Using a tax rate of 34%, compute Heron’s current income tax expense or benefit.
Expert Answer
Heron’s current income tax expense or benefit would be:
= ($4,000,000 – $500,000 + $700,000 + $200,000) × 34%
= $4,400,000 × 34%
= $1,496,000