In 2020, Amirante Corporation had pretax financial income of $168,000 and taxable income of $120,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 20%. Compute the amount to be reported as income taxes payable at December 31, 2020.

In 2020, Amirante Corporation had pretax financial income of $168,000 and taxable income of $120,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 20%. Compute the amount to be reported as income taxes payable at December 31, 2020.

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Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 20CE

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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

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In 2020, Amirante Corporation had pretax financial income of $168,000 and taxable
income of $120,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 20%. Compute the amount to be reported as income taxes payable at December 31, 2020.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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