Harley Bean Corporation claimed a tax deduction of $5,000 which was uncertain when it was deducted in the current year. However, they are relatively certain of receiving the deduction over a five-year period. Their book income for the current year is $100,000 and they have a tax rate of 25%. Which of the following is true?
Multiple choice question.
O Harley has a deferred tax asset of $1,000.
O Harley's taxable income is equal to $5,000
O The current portion of Harley's income tax expense is $5,000.
O Under GAAP, Harley subtracts the entire $5,000 in the current year.