Ann Corporation reported pretax book income of $1,860,000. Included in the compu
ID: 2341544 • Letter: A
Question
Ann Corporation reported pretax book income of $1,860,000. Included in the computation were favorable temporary differences of $142,500, unfavorable temporary differences of $125,000, and favorable permanent differences of $180,000. Compute the company’s book equivalent of taxable income. Use this number to compute the company’s total income tax provision or benefit.
1) Find Book Equiv.
2) Find Total Income Tax Provision/Benefit
Marginal Tax Rate, 2018: 21%
Ann Corporation reported pretax book Income of $1.860,000. Included In the computation were favorable temporary differences of $142,500, unfavorable temporary differences of $125,000, and favorable permanent differences of $180,000. Compute the company's book equivalent of taxable Income. Use this number to compute the company's total Income tax provislon or benefit. Book equivalent of taxableExplanation / Answer
Solution :
Book equivalent taxable income, takes into account only permanant differences.
Computation of Book Equivalent of Taxable Income - Ann Corporation Particulars Amount Pre tax book income $1,860,000.00 Less: Favorable permanent differences $180,000.00 Book Equivalent of taxable income $1,680,000.00 Total income tax provision (21%) $352,800.00