aramel Corp. prepared the following reconciliation of income per books with income per tax return for the year ended December 31, 2021: Book income before income taxes 2,700,000.00 Add temporary
Caramel Corp. prepared the following reconciliation of income per books with income per tax return for the year ended December 31, 2021:
| Book income before income taxes | 2,700,000.00 |
| Add temporary difference | |
| Installment revenue which will reverse in 2022 |
240,000.00 |
| Deduct temporary difference | |
| |
(960,000.00) |
| Taxable income |
1,980,000.00 |
Caramel Corp effective income tax rate is 25% for 2021. What amount should Caramel Corp report in its 2021 income statement as the current provision for income tax expense?
This provision is an important part of a company's financial statements since it indicates the company's commitment to meet its tax obligations. The current provision for income tax expense is the company's best estimate of how much it will have to pay in income taxes on its earnings for the current year, as required by tax laws and regulations. It is used for reporting and disclosing the anticipated tax liability to shareholders, investors, and regulatory authorities.
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