Question
Williams Company had depreciation in 2016 for tax purposes of $30,000 but for book purposes only $18,000. Also in 2016, Williams recognized a loss from
Williams Company had depreciation in 2016 for tax purposes of $30,000 but for book purposes only $18,000. Also in 2016, Williams recognized a loss from a contingency amounting to $40,000 which the Internal Revenue Service does not allow until it actually occurs and did in 2017. Finally, Williams recognized $19,000 of interest income in its financial statements which the Internal Revenue Service will never regard as income.
Taxes paid in 2016 were $90,000 with a tax rate of 30%. Determine:
The financial accounting income for 2016
The tax expense for 2016.
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