McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

تمرين 9

Lodge, Inc. reported pre-tax book income of $5,000,000. During the year, the company increased its reserve for warranties by $200,000. The company deducted $50,000 on its tax return related to warranty payments made during the year. What is the impact on taxable income compared to pre-tax book income of the book-tax difference that results from these two events
a. Favorable (decreases taxable income)
b. Unfavorable (increases taxable income)
c. Neutral (no impact on taxable income)