For 2015, Wasabi Company has accounting revenues of $6,000. However, because of temporary differences between tax and accounting, $1,000 of this is not subject to tax. If expenses are $3,000 for both tax and accounting, and the tax rate is 40%, what is the amount of tax payable to the IRS?

Question

Quizplus · Accepted Answer

Taxable income is $5,000 ($6,000 - $1,000). Tax payable is 40% of $2,000 ($5,000 - $3,000), which equals $800.

For 2015, Wasabi Company Has Accounting Revenues of $6,000