Sparrow Corporation reported pretax book income of $5,000,000.During the current year,the reserve for warranties increased by $300,000.In addition,tax depreciation exceeded book depreciation by $400,000.Finally,Sparrow received $50,000 of tax-exempt interest from municipal bonds.Using a tax rate of 34%,compute Sparrow's current income tax expense or benefit.

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The Answer of Sparrow Corporation reported pretax book income of $5,000,000.During the current year,the reserve for warranties increased by $300,000.In addition,tax depreciation exceeded book depreciation by $400,000.Finally,Sparrow received $50,000 of tax-exempt interest from municipal bonds.Using a tax rate of 34%,compute Sparrow's current income tax expense or benefit.

Sparrow Corporation Reported Pretax Book Income of $5,000,000