RoofCo reports total book income before taxes of $20 million and a total tax expense of $8 million. FloorCo reports book income before taxes of $30 million and a total tax expense of $12 million. The companies’ breakdown between current and deferred tax expense (benefit) is as follows.
RoofCo’s deferred tax benefit is from a deferred tax asset created because of differences in book and tax depreciation methods for equipment. FloorCo’s deferred tax benefit is created by the expected future use of an NOL. Compare and contrast these two companies’ effective tax rates. How are they similar? How are they different?
Answer to relevant QuestionsLawnCo and TreeCo operate in the same industry, and both report a 30% effective tax rate. Their book income and current, deferred, and total tax expense are reported below. ShrubCo is a competitor of both of these companies. ...Britton, Inc., an accrual basis C corporation, sells widgets on credit. Its book and taxable income for year 1 totals $60,000 before accounting for bad debts. Britton’s book allowance for uncollectible accounts increased ...Relix, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Based on this information, determine Relix’s net deferred tax asset or net deferred tax liability at ...Define the terms temporary difference and permanent difference as they pertain to the financial reporting of income tax expenses. Describe how these two book-tax differences affect the gap between book and taxable income. ...Using publicly available resources, locate summary financial information for two companies in the same industry. Compare and contrast the following items across the two companies: debt-to-equity ratio, return on assets ...
Post your question