Ivanhoe Company has the following cumulative taxable temporary differences: 12/31/22 12/31/21 $3200000 $2260000 The tax rate enacted for 2022 is 30%, while the tax rate enacted for future years is 20%. Taxable income for 2022 is $5900000 and there are no permanent differences. Ivanhoe's pretax financial income for 2022 is

$6,840,000

Explanation:

        12/31/21                   12/31/22    

    $2260000               $3200000

taxable income for 2022 = $5,900,000

Ivanhoe's pretax financial income = 2022 taxable income + (temporary differences 2022 - temporary differences 2021) = $5,900,000 + ($3,200,000 - $2,260,000) = $5,900,000 + $940,000 = $6,840,000

A taxable temporary difference will affect future taxable amounts when determining a profit or loss.

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