Calculating temporary and permanent differences
Hernan Company reports the following information for the year:
|
Book income before income taxes |
€636,000 |
|
Income tax expense |
€312,000 |
|
Income taxes payable for the year |
€96,000 |
|
Income tax rate on taxable income |
40% |
The company has both permanent and temporary differences between book income and taxable income.
Required
(a) What is the amount of temporary differences for the year? Indicate whether the effect is to make book income larger or smaller than taxable income.
(b) What is the amount of permanent differences for the year? Indicate whether the effect is to make book income larger or smaller than taxable income.
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