Question

Pretax financial statement income for the year ended december 31, 2006, was $25 million for scott pen company. scott's taxable income was $30 million. this was a result of differences between depreciation for financial reporting purposes and tax purposes. the enacted tax rate is 30% for 2006 and 40% thereafter. what amount should scott report as the current portion of income tax expense for 2006?

a) $7.5 million
b) 9 million
c) 10 million
d) 12 million

Answer 1

The Scott Pen Company should report $9 million as the current portion of income tax expense for 2006, which is calculated by applying the enacted tax rate of 30% to the taxable income of $30 million.

The correct option is B) $9 million.

Step-by-step explanation:

The question asks about the current portion of income tax expense that should be reported by Scott Pen Company for the year ended December 31, 2006. Given that Scott's taxable income was $30 million and the enacted tax rate for 2006 was 30%, the income tax expense can be calculated by multiplying the taxable income by the tax rate for that year.

Therefore, the current portion of income tax expense for 2006 is $30 million multiplied by 30%, which results in $9 million. The correct option is B) $9 million.