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%.

---

Definitions:

Generation X

People born approximately between the early-to-mid 1960s and early 1980s, known for their bridging role between the Baby Boomers and Millennials.

Computer Programmer

A professional who writes, tests, and maintains the code and scripts that allow computer applications and software programs to function properly.

Baby Boomers

Baby Boomers are the demographic cohort born approximately between 1946 and 1964, known for experiencing significant economic prosperity, social change, and cultural shifts.

Rite of Passage

A ceremonial event or ritual marking an important stage in someone's life, especially marking the transition from one social status to another.