Question 15 Dalrymple, Inc. has operations in a country that taxes ordinary net income at

a rate of 40%, has gains on the sale of long-term assets at 20%, and exempts interest income from any taxation. Dalrymple’s net income before taxes is derived from the following sources: Net Income from Ordinary Activities $2,000,000 Net Income from Sale of Long-term Asset 1,000,000 Net Interest Income 1,000,000 Net Income before Taxes 4,000,000 On its income statement, Dalrymple should:

A.apply an effective tax rate of 25%.

B.show its income in different categories and apply the appropriate tax rate to each.

C.apply an effective tax rate of 40% and add $600,000 to its deferred tax liability account.

D.apply an effective tax rate of 40% and add $600,000 to its deferred tax asset account.