B-Line Company Reported Pretax Net Income from Continuing Operations of $1,000,000

question 19

Essay

B-Line Company reported pretax net income from continuing operations of $1,000,000 and taxable income of $800,000. The favorable book-tax difference of $200,000 was due to a $100,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $50,000 due to accrued vacation pay, and a $150,000 favorable permanent difference from the dividends received deduction.
a. Compute B-Line's current income tax expense.
b. Compute B-Line's deferred income tax expense or benefit.
c. Compute B-Line's effective tax rate.
d. Provide a reconciliation of B-Line's effective tax rate with its hypothetical tax rate of 21 percent.

---

Definitions:

Papaya Industry

The sector of agriculture and commerce dedicated to the cultivation, processing, and distribution of papayas, including production of fruit, seeds, and derived products.

Transgenic Animals

Animals that have been genetically modified to carry and express genes from other species, often used in research, medicine, and agriculture.

Medicinal Proteins

Biologically active proteins used in therapy to treat diseases.

Human Drugs

Substances used for medication or in the preparation of medication to treat or prevent diseases in humans.