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Presented below are selected financial results from two lawn care companies from 2021. Both companies have a 25% effective tax rate. Comment as to what
Presented below are selected financial results from two lawn care companies from 2021. Both companies have a 25% effective tax rate. Comment as to what you think may have caused such a large difference in current and deferred tax expense between the companies. Book Income before tax Current tax expense Deferred tax expense (benefit) Total tax expense Effective tax rate Company A 25% $600,000 $200,000 ($50,000) $150,000 Company B 25% $780,000 $20,000 $175,000 $195,000
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