Questions -

1. North, Inc., earns book net income before tax of $500,000 in 2010. In computing its book income, North deducts $50,000 more in warranty expense for book purposes than allowed for tax purposes. North has no other temporary or permanent differences. Assuming the U.S. tax rate is 35% and no valuation allowance is required, what is North's total income tax expense reported on its financial statements for 2010?

a. $175,000.

b. $192,500.

c. $157,500.

d. $17,500.

e. None of the above.

2. North, Inc., earns book net income before tax of $500,000 in 2010. In computing its book income, North deducts $50,000 more in warranty expense for book purposes than allowed for tax purposes. North has no other temporary or permanent differences. Assuming the U.S. tax rate is 35% and no valuation allowance is required, what is North's current income tax expense reported on its financial statements for 2010?

a. $175,000.

b. $192,500.

c. $157,500.

d. $17,500.

e. None of the above.

3. North, Inc., earns book net income before tax of $500,000 in 2010. In computing its book income, North deducts $50,000 more in warranty expense for book purposes than allowed for tax purposes. North has no other temporary or permanent differences. Assuming the U.S. tax rate is 35% and no valuation allowance is required, what is North's deferred income tax asset reported on its financial statements for 2010?

a. $175,000.

b. $192,500.

c. $157,500.

d. $17,500.

e. None of the above.