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  • Cavan Company Prepared The Following Reconciliation Between Book Income and

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    Taimour Hassan
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    Cavan Company reconciled its pretax book income of $1,000,000 with its taxable income of $600,000, resulting in a difference of $400,000. This difference was due to $100,000 in tax-exempt interest income and $300,000 in lower financial depreciation expenses for tax purposes. With Cavan's effective tax rate of 30% for Year 1, and the depreciation difference reversing equally over the next three years, the deferred portion of Cavan's provision for income taxes for Year 1 should be $100,000.

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    Cavan Company Prepared the Following Reconciliation Between Book Income And

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    Cavan Company reconciled its pretax book income of $1,000,000 with its taxable income of $600,000, resulting in a difference of $400,000. This difference was due to $100,000 in tax-exempt interest income and $300,000 in lower financial depreciation expenses for tax purposes. With Cavan's effective tax rate of 30% for Year 1, and the depreciation difference reversing equally over the next three years, the deferred portion of Cavan's provision for income taxes for Year 1 should be $100,000.

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    15 views1 page

    Cavan Company Prepared The Following Reconciliation Between Book Income and

    Uploaded by

    Taimour Hassan
    Cavan Company reconciled its pretax book income of $1,000,000 with its taxable income of $600,000, resulting in a difference of $400,000. This difference was due to $100,000 in tax-exempt interest income and $300,000 in lower financial depreciation expenses for tax purposes. With Cavan's effective tax rate of 30% for Year 1, and the depreciation difference reversing equally over the next three years, the deferred portion of Cavan's provision for income taxes for Year 1 should be $100,000.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Cavan Company prepared the following reconciliation

    between book income and #3217


    Cavan Company prepared the following reconciliation between book income and taxable
    income for the current yearPretax accounting $ 1,000,000Taxable income (600,000)Difference
    $ 400,000Differences:Interest on municipal income $ 100,000Lower financial depreciation
    300,000Total $ 400,000Cavan’s effective income tax rate for Year 1 is 30%. The depreciation
    difference will reverse equally over the next three years at enacted tax rates as follows:Year Tax
    RateYear 2 30%Year 3 25%Year 4 25%In Cavan’s Year 1 Income Statement, the deferred
    portion of its provision for income taxes should be: a. $ 120,000 b. $ 80,000 c. $ 100,000 d. $
    90,000View Solution:
    Cavan Company prepared the following reconciliation between book income and

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