Question
Robinson Company had a net deferred tax liability of $34,476 at the beginning of the year, representing a net taxable temporary difference of $101,400 (taxed
Robinson Company had a net deferred tax liability of $34,476 at the beginning of the year, representing a net taxable temporary difference of $101,400 (taxed at 34%). During the year, Robinson reported pretax book income of $401,400. Included in the computation were favorable temporary differences of $51,400 and unfavorable temporary differences of $20,700. During the year, Congress reduced the corporate tax rate from 34% to 21%. Robinson's deferred income tax expense or benefit for the current year would be:
- Net deferred tax benefit of $6,447.
- Net deferred tax expense of $6,447.
- Net deferred tax benefit of $6,735.
- Net deferred tax expense of $6,735.
TarHeel Corporation reported pretax book income of $1,026,000. During the current year, the net reserve for warranties increased by $101,300. In addition, tax depreciation exceeded book depreciation by $206,500. Finally, TarHeel subtracted a dividends received deduction of $55,200 in computing its current year taxable income. TarHeel's accounting effective tax rate is:
- 21%.
- 19.87%.
- 18.74%.
- 17.61%.
Jones Company reported pretax book income of $405,000. Included in the computation were favorable temporary differences of $50,500, unfavorable temporary differences of $20,250, and favorable permanent differences of $40,250. Book equivalent of taxable income is:
- $445,250.
- $405,000.
- $364,750.
- $334,250.
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