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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
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. Company A Company B Book Income before tax $600,000 $780,000 Current tax expense $200,000 $20,000 Deferred tax expense (benefit) ($50,000) $175,000 Total tax expense $150,000 $195,000 Effective tax rate 25% 25%
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