1. The records for Bosch Co. show this data for 2018: Gross profit on installment sales recorded on the financial books was $480.000. Gross profit from those same sales for tax purposes was only $320,000 Life insurance expense on officers was $3,800 for book purposes (not deductible for tax purposes). Machinery was acquired in January for $300,000. For book reporting, straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used which allows Bosch to deduct 14% of the acquisition cost as depreciation for 2018. Income recorded in the financial books for interest received on tax exempt lowa State bonds was $9,000 (not taxable). The estimated warranty liability related to 2018 sales was $21,600 for book purposes. Actual warranty repair costs during 2018 were $13,600, thus the ending book warranty liability was $8,000. The remainder of the costs will be incurred in 2019. Pretax financial (i.e., book) income is $700,000. The tax rate is 30%. What is the impact of permanent differences when computing taxable income from pretax 1. What impact does depreciation expense have on pretax income when converting -pretax income to taxable income? O A reduction to pretax income of $12,000 to arrive at taxable income. An additional $42,000 depreciation deduction to pretax income to arrive at taxable income. An increase of $12,000 to pretax income to arrive at taxable income. O No impact