Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. cavan company prepared the following reconciliatio

Cavan Company prepared the following reconciliation between book income and taxable income for the current...

70.2K

Verified Solution

Question

Accounting

Cavan Company prepared the following reconciliation between book income and taxable income for the current year ended December 31, year 1.

Pretax accounting income $1,000,000
Taxable income (600,000)
Difference $400,000
Book-tax differences:
Interest on municipal income $100,000
Lower financial depreciation 300,000
Total $400,000

Cavan's effective Federal and state income tax rate for year 1 is 30%. The depreciation difference will reverse equally over the next three years at enacted tax rates as follows.

Year Tax Rate
Year 2 30%
Year 3 25%
Year 4 25%

In Cavan's year 1 income statement, the deferred portion of its provision for income taxes should be:

$120,000

$80,000

$100,000

$90,000

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Horace and Myrtle want to buy a house. Their banker offered them a fully amortizing $95,000...

Finance
Q

On January 1, 2019 Lessee Co., leased equipment from Lessor Co. The equipment had a useful...

Accounting
Q

What is product feedback inhibition? Explain how product feedback inhibition happens in Lac operon.

Biology
Q

a.     What role do self-advocacy programs play in shaping the experience of individuals with DS? b.     What impact...

Psychology
Q

Topic 4: 1a.) Define prejudice and distinguish between prejudice, stereotypes and discrimination. 1b). What is the difference...

Psychology
Q

Identify the bacterial shape a coccus O b bacillus O c spiral O d sarcina

Biology
Q

Identify 5 pollutants that accumulate in the air

Biology
Q

A plane flying with a constant speed of 9 km min passes over a ground...

Geometry
Q

Divide.7?1862Select the correct choice below and fill in any answer boxes in your choice.A. The...

Basic Math
Q

Outdoor Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The...

Accounting
Q

WFO Corporation has gross receipts according to the following schedule: Year 1 $2.70 million Year...

Accounting
Q

Describe three primary ways of incorporating dividends into the binomial model

Accounting