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Problem 19-02 Taxable Income

Problem 19-02

The pretax financial income of Carla Company differs from its taxable income throughout each of 4 years as follows.

Year


Pretax
Financial Income


Taxable Income


Tax Rate

2020
$266,000
$193,000
35%
2021
337,000
247,000
20%
2022
374,000
279,000
20%
2023
407,000
528,000
20%


Pretax financial income for each year includes a nondeductible expense of $29,200 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2020.

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