Answer:
Marlin's current income tax expense is $238,140.
Explanation:
Using the US current corporate tax rate of 21%, Marlin's current income tax expense or benefit can be determined by taking into consideration the effects of other revenue and expenses items on the pretax income to obtain taxable income as as follows:
<u>Particulars Amount ($) </u>
Pretax book income 1,020,000
Increase in net reserve for warranties 29,000
Amount of depreciation exceeded 102,000
Dividends received deduction <u> (17,000) </u>
Taxable income 1,134,000
Tax expense (21% * $1,134,000) <u> (238,140) </u>
Income after tax <u> 895,860 </u>
Therefore, Marlin's current income tax expense is $238,140.
Note:
Marlin's current income tax expense is obtained as follows:
Tax expense = Tax rate * Taxable income = 21% * $1,134,000 = $238,140.
