Assume that Gonzalez-Zabala Corporation had pretax financial income [before cons

Question

Assume that Gonzalez-Zabala Corporation had pretax financial income [before considering items through] of $900.000 for the current year. Compute the taxable income for the current year. The following information was taken from Chokr Corporation's 2016 income statement: Chokr's first year of operations was 2016. The company has a 30 percent tax rate. Management decided to use accelerated depreciation for tax purpose and the straight-line method of depreciation for financial reporting purposes. The amount charged to depreciation expense in 2016 was $600,000. Assuming no other differences existed between book income and taxable income, what amount did Chokr deduct for depreciation on its tax return for 2016? Mason Company had pretax accounting income of $24,000 during 2015. Mason's only temporary difference for 2015 relates to a sale made in 2011 and recognized for accounting purposes at that time. However, under the tax code, Mason reports cash income when collected

Explanation / Answer

Financial Depreciation $ 600,000 Differential Depreciation (36000/30%) $ 120,000 Tax Depreciation $ 720,000

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