Taylor Company began manufacturing operations on January 2, 2015. During 2015 Taylor earned pre-tax book income of $150,000 and had taxable income of $200,000. Taylor had a temporary difference relating to accrued product warranty costs that are expected to be paid as follows:
$$\begin{array} { l r }
2016 & \$ 30,000 \
2017 & \$ 15,000 \
2018 & \$ 5,000
\end{array}$$
-Income tax expense for 2015 is

Question

Taylor Company began manufacturing operations on January 2, 2015. During 2015 Taylor earned pre-tax book income of $150,000 and had taxable income of $200,000. Taylor had a temporary difference relating to accrued product warranty costs that are expected to be paid as follows:
$$\begin{array} { l r } 
2016 & \$ 30,000 \
2017 & \$ 15,000 \
2018 & \$ 5,000
\end{array}$$
-Income tax expense for 2015 is

Quizplus · Accepted Answer

The income tax expense is calculated based on the pre-tax book income. The tax rate is 30% (since $45,000 is 30% of $150,000). The temporary difference due to warranty costs does not affect the current year's tax expense calculation.

Taylor Company Began Manufacturing Operations on January 2, 2015 2016$30,0002017$15,0002018$5,000\begin{array} { l r } 2016 & \$ 30,000 \\2017 & \$ 15,000 \\2018 & \$ 5,000\end{array}201620172018​$30,000$15,000$5,000​

Taylor Company Began Manufacturing Operations on January 2, 2015 $\begin{array} { l r } 2016 & \$ 30,000 \\2017 & \$ 15,000 \\2018 & \$ 5,000\end{array}$