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P14-5 Determining current and deferred portion of tax expense and reconciling statutory and effective tax rates (LO 14-2, LO 14-4, LO 14-9) Metge Corporation's worksheet
P14-5 Determining current and deferred portion of tax expense and reconciling statutory and effective tax rates (LO 14-2, LO 14-4, LO 14-9) Metge Corporation's worksheet for calculating taxable income for 20x1 follows: ($ in thousands) 20X1 Pre-tax income $1,000 Permanent differences: Goodwill impairment 400 Interest on municipal bonds (200) Temporary differences: Depreciation (800) Warranty costs 400 Rent received in advance 600 Taxable income $1,400 The enacted tax rate for 20X1 is 21%, but it is scheduled to increase to 25% in 20X2 and subse quent years. All temporary differences are originating differences. Metge had no deferred ta assets or deferred tax liabilities at December 31, 20X0. Required: 1. Determine Metge's 20X1 taxes due. 2. What is the change in deferred tax assets (liabilities) for 20X1? 3. Determine tax expense for 20X1. 4. Provide a schedule that reconciles Metges statutory and effective tax rates (in both per- centages and dollar amounts) for 20X1
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