For the current year ($ in millions), Centipede Corp. had $90 in pretax accounting income. This...
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For the current year ($ in millions), Centipede Corp. had $90 in pretax accounting income. This included warranty expense of $8 and $19 in depreciation expense. 7 million of warranty costs were incurred, and MACRS depreciation amounted to $42. In the absence of other temporary or permanent differences, what was Centipede's income tax payable currently, assuming a tax rate of 40%? |
| a) | 18.6 Million |
| b) | 24.0 Million |
| c) | 27.2 Million |
| d) | 32.8 Million |
Homework Answers
Taxable Income = pretax accounting income + warranty expense + depreciation expense - warranty costs were incurred - MACRS depreciation
Taxable Income = 90 + 8 + 19 - 7 - 42
Taxable Income = $ 68
Centipede's income tax payable = Taxable Income*tax rate
Centipede's income tax payable = 68*40%
Centipede's income tax payable = $ 27.20 Million
Answer
c) 27.2 Million
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