Compute oriole company effective tax rate

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Question - 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%.

Reference no: EM131894560

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