Question
During its first year of operations a company recorded accrued warranty expense totaling $75,000 for book purposes. For tax purposes, $25,000 of the expenses are
During its first year of operations a company recorded accrued warranty expense totaling $75,000 for book purposes. For tax purposes, $25,000 of the expenses are deductible during the first year of operations and $50,000 are deductible during the second year of operations. Book income from operations during the first year was $750,000. The enacted income tax rate was 40% during the first year of operations and 45% during the second year of operations. The income tax expense to be reported in the income statement for the first year of operations is:
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