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11 December, 20:36

For the year ended December 31, year 5, Pering Co. reported pretax financial income of $550,000. Its current tax expense was $144,000. Pering reported a difference between pretax financial statement income and taxable income. This difference is due to accelerated depreciation for income tax purposes. Pering's effective income tax rate is 30% and Pering made estimated tax payments during year 5 of $75,000. What amount did Paring report as taxable income for year 5?

405,000

480,000

475,000

550,000

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Answers (1)
  1. 11 December, 23:24
    0
    Answer: $480,000 is the taxable income for year 5 reported by Paring report.

    Given:

    Pretax financial income = $550,000

    Current tax expense = $144,000

    Effective income tax rate is 30%

    Taxable income is computed as:

    Taxable income = Tax expense : Current tax rate

    Taxable income = $144,000 : 30%

    Taxable income = $480,000
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