Gull Corporation reported pretax book income of $2,000,000. Included in the computation were favorable temporary differences of $300,000, unfavorable temporary differences of $200,000, and favorable permanent differences of $50,000. Compute Gull's current income tax expense or benefit.
What will be an ideal response?
$388,500 current income tax expense.
| Pretax book income | $ | 2,000,000 | |
| Favorable temporary differences | (300,000 | ) | |
| Unfavorable temporary differences | 200,000 | ||
| Favorable permanent differences | (50,000 | ) | |
| Taxable income | $ | 1,850,000 | |
| × 21% | × 21 | % | |
| Current income tax expense | $ | 388,500 | |
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