Baker Company reports the following information for a year:
Book Income Before Income Taxes..........................................$318,000
Income Tax Expense............................................................... 156,000
Income Taxes Payable for the Year........................................ 48,000
Income Tax Rate on Taxable Income .................................... 40%
Baker has both permanent and temporary differences between book income and taxable income.
a. What is the amount of temporary differences for the year? Give the amount, and indicate whether the effect is to make book income larger or smaller than taxable income.
b. What is the amount of permanent differences for the year? Give the amount, and indicate whether the effect is to make book income larger or smaller than taxable income.

Question

Quizplus · Accepted Answer

The Answer of Baker Company reports the following information for a year:
Book Income Before Income Taxes..........................................$318,000
Income Tax Expense............................................................... 156,000
Income Taxes Payable for the Year........................................ 48,000
Income Tax Rate on Taxable Income .................................... 40%
Baker has both permanent and temporary differences between book income and taxable income.
a. What is the amount of temporary differences for the year? Give the amount, and indicate whether the effect is to make book income larger or smaller than taxable income.
b. What is the amount of permanent differences for the year? Give the amount, and indicate whether the effect is to make book income larger or smaller than taxable income.

Baker Company Reports the Following Information for a Year