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murtdoll
Jan 9, 2007, 08:56 AM
A Company reported $350,000 in income before income tax for financial reporting (book) purposes in Year 3, its first year of operation. The tax depreciatin exceeded its book depreciation by $30,000. The tax rate for Year 3 and all future years is 40%. Income tax expense reported on the company income statement for Year 3 would be____________?

A. $120,000

B. $128,000

C. $140,000

D. $152,000


My answer is B. $128,000. This how I came up with my answer:

Reported income before taxes $350,000
Minus tax depreciation 30,000
Equals 320,000
Times 40% tax rate
Equals $128,000

Is this correct? If not will someone please tell me what I am doing wrong.

CaptainForest
Jan 11, 2007, 08:11 PM
Seems right.