CTE (a) DTA (b) Effect tax rate change (c) Effective tax rate (d)
Please show detailed calculations / Explanation!
In its 2019
Tax reporting 2019 2020 2021 2022
Revenues over deductions $25,000 $17,000 $18,000 $19,000
Warranty costs incurred (4,500) (4,500) (4,500) (4,500)
Taxable income 20,500 12,500 13,500 14,500
Financial reporting 2019 2020 2021 2022
Revenues over expenses $25,000 $17,000 $18,000 $19,000
Municipal interest income 5,000 -0- -0- -0-
Warranty expense accrued (18,000) -0- -0- -0-
Pretax financial income 12,000 17,000 18,000 19,000
B1. Assume now that the enacted tax rates on 1/1/2019 were 30% for all years. Then, in early 2020 the rates were decreased unexpectedly to 20% for 2020 and all later years. Complete the table provided below for 2019 through 2022 as reported in the respective financial statements for each year. Below the table, show well-labeled calculations or explanations for values in the table.
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2019 |
2020 |
2021 |
2022 |
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Income before taxes |
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Provision for income taxes: |
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Current ITE (a) |
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At enacted tax rates (b) |
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Effect of one-time decrease in tax rate (c) |
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Total provision for taxes |
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Net Income |
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Effective income tax rate (d) |
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B.2. For values you entered in rows a through d in the table, show supporting calculations for each year, 2019 to 2022.
- CTE (a)
- DTA (b)
- Effect tax rate change (c)
- Effective tax rate (d)
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