Will give thumbs up Use the information from the Basic Illustration EXCEPT that a new tax rate was enacted and changed in 20X4 Calculation of DIT 20X1 20X2 20X3 20X4 20X5 NBV T R Table 2 243,333 149,988 79,988 33,315 0 NBV F S Table 3 288,000 216,000 144,000 72,000 0 depreciation difference 44,667 66,012 64,012 38,685 0 tax rate 33 33 33 37 37 cumulative DIT x tax rate 14,740 21,784 21,124 14,313 0 or decrease in DIT 14,740 7,044 660 6,811 14,313 Calculation of Income Tax Payable 20X1 20X2 20X3 20X4 20X5 Total Book Inc Before Tax 80,000 82,000 84,000 86,000 88,000 420,000 depreciation diff 44,667 21,345 2,000 25,327 38,685 0 Taxable Income 35,333 60,655 86,000 111,327 126,685 420,000 tax rate 33 33 33 37 37 Income Tax Payable 11,660 20,016 28,380 41,191 46,873 148,120 Journal entry (debit and ) 20X1 20X2 20X3 20X4 20X5 Income Tax Expense 26,400 27,060 27,720 34,380 32,560 DIT 14,740 7,044 660 6,811 14,313 Income Tax Payable 11,660 20,016 28,380 41,191 46,873 Book Inc Before Tax 80,000 82,000 84,000 86,000 88,000 effective tax rate 33 00 33 00 33 00 39 98 37 00 In the space below, TYPE your explanation in words and a supporting calculation on WHY (i e , what caused the effective rate in 20X4 to be 39 98 rather than 37 Be sure your calculation shows how the 39 98 is determined this does NOT mean your answer is you divide Income Tax Expense by Book Income Before Tax The issue to address is WHY this does not yield an answer of 37 , or even 33 What makes it 39 98 in 20X4

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Will give thumbs up Use the information from the Basic Illustration EXCEPT that a new tax rate was enacted and changed in 20X4. Calculation of

Will give thumbs up

Use the information from the Basic Illustration EXCEPT that a new tax rate was enacted and changed in 20X4.

Calculation of DIT

	20X1	20X2	20X3	20X4	20X5
NBV T/R Table 2	243,333	149,988	79,988	33,315	-0-
NBV F/S Table 3	288,000	216,000	144,000	72,000	-0-
depreciation difference	<44,667>	<66,012>	<64,012>	<38,685>	-0-
tax rate	33%	33%	33%	37%	37%
cumulative DIT x tax rate	<14,740>	<21,784>	<21,124>	<14,313>	-0-
or decrease in DIT	<14,740>	<7,044>	660	6,811	14,313

Calculation of Income Tax Payable

	20X1	20X2	20X3	20X4	20X5	Total
Book Inc Before Tax	80,000	82,000	84,000	86,000	88,000	420,000
depreciation diff	<44,667>	<21,345>	2,000	25,327	38,685	-0-
Taxable Income	35,333	60,655	86,000	111,327	126,685	420,000
tax rate	33%	33%	33%	37%	37%
Income Tax Payable	11,660	20,016	28,380	41,191	46,873	148,120

Journal entry (debit and )

	20X1	20X2	20X3	20X4	20X5
Income Tax Expense	26,400	27,060	27,720	34,380	32,560
DIT	<14,740>	<7,044>	660	6,811	14,313
Income Tax Payable	<11,660>	<20,016>	<28,380>	<41,191>	<46,873>
Book Inc Before Tax	80,000	82,000	84,000	86,000	88,000
effective tax rate	33.00%	33.00%	33.00%	39.98%	37.00%

In the space below, TYPE your explanation in words and a supporting calculation on WHY (i.e., what caused the effective rate in 20X4 to be 39.98% rather than 37%. Be sure your calculation shows how the 39.98% is determined this does NOT mean your answer is you divide Income Tax Expense by Book Income Before Tax. The issue to address is WHY this does not yield an answer of 37%, or even 33%. What makes it 39.98% in 20X4?