Question

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $340,000 Permanent difference (14,500) 325,500 Temporary difference-depreciation (19,900) Taxable income $305,600 Tringali's tax rate is 36%.

What should Tringali report as its income tax expense for its first year of operations?

a. $110,016.

b. $122,400.

c. $117,180

d.$120,681

Answer 1

Option (a) is correct.

Step-by-step explanation:

The company should use the taxable income of $305,600 to calculate it's income tax expense, as that is what they will actually have to pay in taxes after year-end.

Tringali report as its income tax expense for its first year of operations:

= Taxable income × Tax rate

= $305,600 × 36%

= $110,016 (Answer)