Reference no: EM133029832

Question - Metge Corporation's worksheet for calculating taxable income for 20X1 follows: ($ in thousands)

20X1 Pre-tax income $1,000

Permanent differences: Goodwill impairment 400 Interest on municipal bonds (200)

Temporary differences: Depreciation (800)

Warranty costs 400 Rent received in advance 600 Taxable income $1,400

The enacted tax rate for 20X1 is 21%, but it is scheduled to increase to 25% in 20X2 and subsequent years. All temporary differences are originating differences. Metge had no deferred tax assets or deferred tax liabilities at December 31, 20X0.

Required -

1. Determine Metge's 20X1 taxes due.

2. What is the change in deferred tax assets (liabilities) for 20X1?

3. Determine tax expense for 20X1.

4. Provide a schedule that reconciles Metge's statutory and effective tax rates (in both percentages and dollar amounts) for 20X1.