Question

In 2017, Amirante Corporation had pretax financial income of \(168,000 and taxable income of \)120,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 40%. Compute the amount to be reported as income taxes payable at December 31, 2017.

Short answer

Financial income is the type of income or revenuean organization earns from its investment into various financial securities that are short-term in nature.

Step-by-step solution

Given are the amounts

Particulars	Amount
Pretax financial income	$168,000
Taxable income	$120,000
Effective tax rate	40%

Computation of income tax payable for December 31, 2017

$\begin{array}{rcl}\mathrm{Income}\mathrm{tax}\mathrm{payable}& =& \mathrm{Taxable}\mathrm{Income}\times \mathrm{Tax}\mathrm{rate}\\ & =& \$120,000\times 40\%\\ & =& \$48,000\end{array}$