Metge Corporation's worksheet for calculating taxable income for 2017 follows:
($ in thousands)________________________________2017
Pre-tax income............................................... $1,000
Permanent differences
Goodwill impairment.......................................... 400
Interest on municipal bonds................................. (200)
Temporary differences
Depreciation.................................................. (800)
Warranty costs................................................ 400
Rent received in advance.................................... 600
Taxable income........................................... $1,400
The enacted tax rate for 2017 is 35%, but it is scheduled to increase to 40% in 2018 and subsequent years. All temporary differences are originating differences. Metge had no deferred tax assets or deferred tax liabilities at December 31, 2016.
Required:
1. Determine Metge's 2017 taxes due.
2. What is the change in deferred tax assets (liabilities) for 2017?
3. Determine tax expense for 2017.
4. Provide a schedule that reconciles Metge's statutory and effective tax rates (in both percentages and dollar amounts).