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5 ( 2 0 pts ) Collard Company had depreciation for tax purposes in 2 0 2 5 of $ 2 5 , 0 0

5(20 pts)
Collard Company had depreciation for tax purposes in 2025 of $25,000 but for book purposes only $20,000.
Also in 2025, Collard recognized a loss from a contingency amounting to $30,000 which the Internal Revenue
Service does not allow until it actually occurs which is likely in 2026. Collard also recognized $14,000 of interest
income from its imvestments in tax exempt bonds which the Internal Reveunue Service will
never regard as income.
Taxes paid in 2025 were $125,000 with a tax rate of 20%.
a. Determine the financial accounting (book) income for 2025
b. Determine the tax expense for 2025.
c. Determine Collard's effective tax rate for 2025.
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