Using the information from BE18-3, calculate the effective rate of income tax for Nilson Inc. for 2011. Also make a reconciliation from the statutory rate to the effective rate, using percentages.
In BE Melissa Inc. reports accounting income of $105,000 for 2011. The following items cause taxable income to be different than income reported on the financial statements.
1. Capital cost allowance (on the tax return) is greater than depreciation on the income statement by $16,000.
2. Rent reported on the tax return is $24,000 higher than rent earned on the income statement.
3. Non-deductible fines for pollution appear as an expense of $15,000 on the income statement.
4. Melissa’s tax rate is 30% for all years and the company expects to report taxable income in all future years. There are no future taxes at the beginning of 2011. Melissa reports under the PE GAAP future income taxes method.