Question - Review of Ace's financial reports and information revealed the following:
Sales 2.4 million
Opening inventory 650,000
Purchase 1.1million
Closing inventory 585,000
Heat, light utilities 300,000
Employee payroll 245,000
Executive salary and pension 350,000
EPA fines 85,000
Life insurance premiums paid 47,000
Life insurance collected on death of vice-president 500,000
Depreciation expense: GAAP Double declining balance total for year 85,000 MACRS, including section 179 and special first year, 692,000
Income tax paid Federal Regular 62,000, AMT 16,000, New York State/City 27,000
Compute income reported for GAAP purposes and taxable income, if different.
Categorize as favorable/unfavorable a differences. Are they timing or permanent differences?