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

Question

Business

Lailah Mclean

14 August, 06:49

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

+1

Answers (1)

Know the Answer?

Carlo · Answer 1

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