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The Second Unknown Company (Permanent Tax Differences): A company's financial reporting (book income) and taxable income (taxable income) before income taxes, municipal bond interest, and
The Second Unknown Company (Permanent Tax Differences): A company's financial reporting (book income) and taxable income (taxable income) before income taxes, municipal bond interest, and warranty expense is $120.000. A company owns a municipal bond that pays $20,000 interest annually, which is not taxable. The company had an accrued warranty expense equal to S40,000 and a warranty tax deduction equal to $25,000. The company accrues warranty expenses based on expected warranty expenses for current year revenues, resulting in an increase in a warranty accrued liability. The company's warranty liability at the end of the year was equal to $135,000. For income taxes, the company can only deduct warranty expenses when it incurs actual warranty expenditures. The company's statutory income tax rate is 40%. Calculate the company's current income tax payable to the taxing authority, its financial reporting or book income before income taxes and provision for income taxes, and its effective income tax rate
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