The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars) : Pretax accounting income:$200 Pretax accounting income included: Overweight fines (not deductible for tax purposes) 5 Depreciation expense 70 Depreciation in the tax return using MACRS: 110 The applicable tax rate is 40%. There are no other temporary or permanent differences. Franklin Freightways experienced ($ in millions) a: Multiple Choice Tax liability of $66. Tax liability of $36. Tax liability of $70.6. Tax benefit of $10 due to the NOL.

Question

Mathematics

Jolie Harvey

1 February, 00:45

The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars) : Pretax accounting income:$200 Pretax accounting income included: Overweight fines (not deductible for tax purposes) 5 Depreciation expense 70 Depreciation in the tax return using MACRS: 110 The applicable tax rate is 40%. There are no other temporary or permanent differences. Franklin Freightways experienced ($ in millions) a: Multiple Choice Tax liability of $66. Tax liability of $36. Tax liability of $70.6. Tax benefit of $10 due to the NOL.

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Answers (1)

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Kylan Hall · Answer 1

Franklin Freightways experienced $66 million.

Step-by-step explanation:

= (Pretax accounting income + Overweight fines - Temporary difference: Depreciation) * tax rate

($200 + 5 - $40) * 40%

=Tax liability of $66.