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    murtdoll's Avatar
    murtdoll Posts: 4, Reputation: 1
    New Member
    		  
    #1

    Jan 9, 2007, 08:56 AM
    Income Tax Expense
    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's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
    Ultra Member
    		  
    #2

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