Metge Corporations worksheet for calculating taxable income for 20X1 follows: ($ in thousands) 20X1 Pre-tax income $1,000
Question:
Metge Corporation’s worksheet for calculating taxable income for 20X1 follows:
($ in thousands) | 20X1 |
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 20X1 is 21%, but it is scheduled to increase to 25% in 20X2 and subsequent years. All temporary differences are originating differences. Metge had no deferred tax assets or deferred tax liabilities at December 31, 20X0.
Required:
1. Determine Metge’s 20X1 taxes due.
2. What is the change in deferred tax assets (liabilities) for 20X1?
3. Determine tax expense for 20X1.
4. Provide a schedule that reconciles Metge’s statutory and effective tax rates (in both percentages and dollar amounts) for 20X1.
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer