Oriole Company Reported Pretax Net Income from Continuing Operations of $1,000,000

question 99

Essay

Oriole Company reported pretax net income from continuing operations of $1,000,000 and taxable income of $1,200,000.The unfavorable book-tax difference of $200,000 was due to a $200,000 favorable temporary difference relating to depreciation,an unfavorable temporary difference of $300,000 due to an increase in the reserve for bad debts,and a $100,000 unfavorable permanent difference from the disallowance of compensation expense related to the exercise of incentive stock options.Oriole Company's applicable tax rate is 34%.
a.Compute Oriole Company's current income tax expense.
b.Compute Oriole Company's deferred income tax expense or benefit.
c.Compute Oriole Company's effective tax rate.
d.Provide a reconciliation of Oriole Company's effective tax rate with its hypothetical tax rate of 34%.

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Definitions:

Demand for Good

Demand for good refers to the quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.

Equilibrium Quantity

Equilibrium quantity is the quantity of goods or services supplied and demanded at the equilibrium price, where the quantity demanded equals the quantity supplied, leading to market stability.

Demand Decreases

A situation where the desire or need for a product or service declines, often leading to lower prices and adjustments in supply.

Supply Increases

Occurs when the quantity of a good or service that a market can offer rises.