Bishop Corporation began operations in 2004 and had operating losses of $200,000 in 2004 and $150,000 in 2005. For the year ended December 31, 2006, Bishop had pretax book income of $300,000. For the three-year period 2004 to 2006, assume an income tax rate of 40% and no permanent or temporary differences between book and taxable income. Because Bishop began operations in 2004, the entire amount of deferred tax assets recognized in 2004 and 2005 were offset with amounts added to the allowance account. In Bishop’s 2006 income statement, how much should be reported as current income tax expense?
- $ 40,000
- $ 60,000