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2: Deferred Income Taxes Baker Company has the following information relating to their income taxes for a three-year period Year 1 Year 2 Year 3
2: Deferred Income Taxes Baker Company has the following information relating to their income taxes for a three-year period Year 1 Year 2 Year 3 GAAP Net Income 1,000 1,000 1,100 Before Odd Items Non-Deductible 15 20 10 Depreciation Expenses (note 1) Expense (note 2) Rents Collected in 20 Advance (note 3) 25 25 25 20 20 GAAP Net Income 1,010 Before Tax 1,015 1,105 The tax rate is expected to be 20% for all years. Note 1: These amounts represent expenses that will never be deductible on the tax return Note 2 The company purchased an asset for $100 in Year 1. The entire amount was deductible on the tax return in year 1. For GAAP, the company was using straight-line over four years Note 3 The company collected revenue in advance in the amount of $80 in year 1. For GAAP purposes, the income will be allocated evenly over the next four years. The entre 380 is ben year Required Calculate the income tax expense for year 1
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