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:

Movements

Actions or activities of changing position or place, or the potential for change in the physical position of the body or of objects.

Pressure

The force exerted on a surface area divided by the total area on which the force is exerted; often related to gases or liquids in scientific contexts.

Vestibular Receptors

Sensory receptors located in the inner ear that are responsible for providing the brain with information about motion, head position, and spatial orientation.

Inner Ear

The innermost part of the ear, containing the cochlea, vestibule, and semicircular canals, responsible for sound detection and balance.