Answer questions 17-20
More accounting for income tax
In its income statement for the year ended 31/12/2020, Gal Corp. reported income before tax of £700,000. Included in income before tax are non-deductible expenses of £40,000, and tax-exempt revenues of £15,000. Also included in income before tax is depreciation expenses of £100,000. In addition, the balance sheet of Gal Corp. as at 1/1/2020 includes only one depreciable assets with an historical cost of £2,000,000 and accumulated depreciation of £1,000,000. Gal Corp. depreciates this asset over 20 years, using the straight-line method with zero salvage value (and this method has been in effect since the asset was acquired). However, for tax purposes, the asset is depreciated over 10 years. Tax rate is 26%. Answer the following questions:
Taxable income for the year ended 31/12/2020 is (select the correct answer):
Income tax expense in the income statement for fiscal 2020 is (select the correct answer):
Net income in the income statement for fiscal 2020 is (select the correct answer):
Change in deferred tax liability for 2020 is (select the correct answer):
A. Increase in deferred tax liability of £25,000
B. Decrease in deferred tax liability of £26,000
C. Increase in deferred tax liability of £20,000
D. Increase in deferred tax liability of £26,000
E. No change in deferred tax liability
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