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:

Malignant Cells

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Surgical Removal

A medical procedure involving the excision of an organ, tissue, or tumor from the body to treat a disease or condition.

Environmental Pollutants

Substances introduced into the environment that cause harm or discomfort to the ecosystem or living organisms, including chemicals, noise, heat, or light.

World Health Organization

A specialized agency of the United Nations responsible for international public health, working to combat diseases and promote general health globally.