Prepare income tax expense section in the income statement

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Question - Frank reports € 80,000 in pre-tax financial income for 2019. The following items cause taxable income to differ from pre-tax financial income.

1. Depreciation on the tax return is greater than depreciation on the income statement of € 16,000

2. Rents collected on tax returns are greater than rental income reported on the income statement of € 27,000

3. Fines for pollution appear as € 11,000 on the income statement

The Frank tax rate is 20% for all years, and the company expects to report taxable income in all coming years. There were no deferred taxes in early 2019.

Requested -

a. Prepare the income tax expense section in the income statement for 2019, starting with the line "Income before income tax".

b. Calculate the effective income tax rate for 2019.

Reference no: EM132536543

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